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Netskope Inc

Netskope IncNTSK财报

Nasdaq

Netskope Inc is a leading global cybersecurity firm offering SASE solutions, cloud security platforms and zero trust tools. It serves enterprise clients across North America, Europe and Asia Pacific, helping secure remote workforces, cloud apps and digital assets against evolving cyber threats.

What changed in Netskope Inc's 10-K — 2025 vs 2026

Top changes in Netskope Inc's 2026 10-K

98 paragraphs added · 975 removed · 70 edited across 1 sections

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

70 edited+28 added−905 removed60 unchanged
On or after the one year anniversary of the completion of the IPO, we may redeem all or any portion of the Convertible Notes for cash at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if the price of our Class A common stock is at least 200% (or in the case of the 2028 Notes, beginning on December 15, 2027, at least 230%) of the then-applicable conversion price for each of at least twenty (20) trading days (whether or not consecutive) during the thirty (30) consecutive trading days prior to providing notice of such redemption.
On or after the one year anniversary of the completion of the IPO, we may redeem all or any portion of the Convertible Notes for cash at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if the price of our Class B common stock is at least 200% (or in the case of the 2028 Notes, beginning on December 15, 2027, at least 230%) of the then-applicable conversion price for each of at least twenty (20) trading days (whether or not consecutive) during the thirty (30) consecutive trading days prior to providing notice of such redemption.
Our future capital requirements will depend on many factors, including but not limited to our obligation to repay any balance under our Convertible Notes, our revenue growth rate, timing of cash receipt and payments, and the timing and extent of spending to support strategic initiatives. We may be required to seek additional equity or debt financing.
Our future capital requirements will depend on many factors, including but not limited to our obligation to repay any balance under our Convertible Notes, our revenue growth rate, timing of cash receipt and payments, and the timing and extent of spending to support strategic initiatives. We may be required to seek additional equity, equity-linked, or debt financing.
Other Income, net Other income, net consists primarily of interest income, amortization of premiums and accretion of discounts on investment, convertible note issuance cost, and gains and losses from foreign currency transactions. Provision for (Benefit from) Income Taxes Provision for (benefit from) income taxes consists primarily of income taxes in certain foreign jurisdictions in which we conduct business.
Other Income, net Other income, net consists primarily of interest income, amortization of premiums and accretion of discounts on investment, convertible note issuance cost, and gains and losses from foreign currency transactions. Provision for Income Taxes Provision for income taxes consists primarily of income taxes in certain foreign jurisdictions in which we conduct business.
JOBS Act Accounting Election We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act (the "JOBS Act"). The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards.
JOBS Act Accounting Election We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards.
However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP.
However, non-GAAP financial information is presented for supplemental information purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP.
We also intend to continue evaluating strategic acquisitions and investments in businesses and technologies that enhance our product capabilities, allow us to enter adjacent markets, and accelerate time to market. 24 Table of Contents Key Business Metric We monitor the following key metric to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.
We also intend to continue evaluating strategic acquisitions and investments in businesses and technologies that enhance our product capabilities, allow us to enter adjacent markets, and accelerate time to market. 67 Table of Contents Key Business Metric We monitor the following key metric to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.
We expect the level of investment as a percentage of revenue to decrease over the long term as we realize the benefits of scale and operating leverage from previous investments we have made. 25 Table of Contents Gross Profit and Gross Margin Gross profit is revenue less cost of revenue and gross margin is gross profit expressed as a percentage of revenue.
We expect the level of investment as a percentage of revenue to decrease over the long term as we realize the benefits of scale and operating leverage from previous investments we have made. 68 Table of Contents Gross Profit and Gross Margin Gross profit is revenue less cost of revenue and gross margin is gross profit expressed as a percentage of revenue.
The fair value of our convertible notes increased during the current quarter; however, the loss recognized in earnings was lower because a larger portion of the total fair value change was attributed to instrument-specific credit risk, which is recorded in other comprehensive income.
The fair value of our convertible notes increased during the current year; however, the loss recognized in earnings was lower because a larger portion of the total fair value change was attributed to instrument-specific credit risk, which is recorded in other comprehensive income.
The improvement in operating cash flows was primarily driven by a decrease in accounts receivable and increases in deferred revenue, accounts payable, and accrued compensation and benefits. These were partially offset by higher deferred contract acquisition cost and prepaid expenses and other current assets.
The improvement in operating cash flows was primarily driven by a decrease in accounts receivable and increases in accrued compensation and benefits, accounts payable, and accrued expenses and other current liabilities. These were partially offset by higher deferred contract acquisition cost and prepaid expenses and other current assets.
Convertible Notes In December 2022, we issued $401.0 million in aggregate principal amount of our 3.75% Convertible Senior PIK Toggle Notes due 2027 (as amended to extend the maturity date to 2028, the "2028 Notes") pursuant to an indenture, dated as of December 22, 2022, as supplemented by that certain First Supplemental Indenture, dated April 25, 2025 (as supplemented, the "2028 Notes Indenture"), between us and U.S.
Convertible Notes In December 2022, we issued $401.0 million in aggregate principal amount of our 3.75% Convertible Senior PIK Toggle Notes due 2027 (as amended to extend the maturity date to 2028, the "2028 Notes") pursuant to an indenture, dated as of December 22, 2022, as supplemented by that certain First Supplemental Indenture, dated April 25, 2025, and Second Supplemental Indenture, dated September 19, 2025 (as supplemented, the "2028 Notes Indenture"), between us and U.S.
As we have built our NewEdge network to include data centers in more than 75 unique regions with more than 200 localization zones globally, we do not anticipate future expansion requirements at the same rate.
As we have built our NewEdge network to include data centers in 80 unique regions with more than 200 localization zones globally, we do not anticipate future expansion requirements at the same rate.
Non-GAAP Loss from Operations and Non-GAAP Operating Margin Non-GAAP loss from operations and non-GAAP operating margin are defined as GAAP loss from operations and GAAP operating margin, respectively, excluding stock-based compensation expense and related taxes, transaction costs related to acquisitions, and amortization of acquired intangible assets.
Non-GAAP Loss from Operations and Non-GAAP Operating Margin Non-GAAP loss from operations and non-GAAP operating margin are defined as GAAP loss from operations and GAAP operating margin, respectively, excluding stock-based compensation expense and related taxes, transaction costs related to acquisitions, amortization of acquired intangible assets, and impairment of right-of-use assets.
We are more dispersed, more productive, and more automated than ever before, and the rate of change is only accelerating. Not since the internet has there been such a transformative tectonic shift. But, with it has come collateral damage—traditional security and networking are now broken. We founded Netskope to address this revolution.
The cloud and AI have completely revolutionized work. We are more dispersed, more productive, and more automated than ever before, and the rate of change is only accelerating. Not since the internet has there been such a transformative tectonic shift. But, with it has come collateral damage—traditional security and networking are now broken. We founded Netskope to address this revolution.
During the third quarter of fiscal 2026, we recognized a total of $415.8 million in stock-based compensation expense and related payroll taxes, of which $402.1 million was stock-based compensation expense associated with Restricted Stock Units (RSUs), including $56.7 million associated with Performance-based Stock Units (PSUs), as a result of the satisfaction of the liquidity-based vesting condition upon the effective date of the Registration Statement on Form S-1 filed in connection with our IPO.
During the third quarter of fiscal 2026, we recognized a total of $415.8 million in stock-based compensation expense and related payroll taxes, of which $402.1 million was stock-based compensation expense associated with Restricted Stock Units ("RSUs"), including $56.7 million associated with Performance-based Stock Units ("PSUs"), resulting from the satisfaction of the liquidity-based vesting condition upon the effective date of the Registration Statement filed in connection with our IPO.
Our NRR may fluctuate from period to period as we continue to expand our business. As of October 31, 2025 2024 Dollar-based net retention rate (1) 118 % 113 % (1) Our NRR reflects the percentage of our annual recurring revenue ("ARR") from existing customers, inclusive of the effects of upsell, cross-sell, contraction, and churn.
Our NRR may fluctuate from period to period as we continue to expand our business. As of January 31, 2026 2025 Dollar-based net retention rate (1) 116 % 113 % (1) Our NRR reflects the percentage of our annual recurring revenue ("ARR") from existing customers, inclusive of the effects of upsell, cross-sell, contraction, and churn.
Employee-related compensation expense increased by $30.3 million due to $27.3 million of stock-based compensation expense and related payroll taxes we recognized as the liquidity-based vesting condition for certain stock-based awards was met upon our IPO.
Employee-related compensation expense increased by $36.3 million due to $29.7 million of stock-based compensation expense and related payroll taxes we recognized as the liquidity-based vesting condition for certain stock-based awards was met upon our IPO.
We anticipate continued improvement over the long term. Notwithstanding the foregoing, we may still incur operating losses and generate negative cash flows from operations in the future due to the investments we intend to continue to make in our business. As a result, we may require additional capital resources to execute strategic initiatives to grow our business.
Notwithstanding the foregoing, we may still incur operating losses and generate negative cash flows from operations in the future due to the investments we intend to continue to make in our business. As a result, we may require additional capital resources to execute strategic initiatives to grow our business.
Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations. 38 Table of Contents Ite m 4.
Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.
We also had $1.2 million of restricted cash as of October 31, 2025, primarily due to collateral in connection with certain facility lease agreements. Our cash, cash equivalents, and marketable securities bear interest and are held for working capital purposes. We do not enter into investments for trading or speculative purposes.
Treasury, and government agency securities. We also had $1.2 million of restricted cash as of January 31, 2026, primarily due to collateral in connection with certain facility lease agreements. Our cash, cash equivalents, and marketable securities bear interest and are held for working capital purposes. We do not enter into investments for trading or speculative purposes.
The increase in revenue was driven by an increase in customers and the growing demand for our products from existing customers. Approximately 48% of the increase was driven by the addition of new customers and approximately 52% of the increase was driven by expansion within our existing customers.
The increase in revenue was driven by an increase in customers and the growing demand for our products from existing customers. Approximately 29% of the increase was driven by the addition of new customers and approximately 71% of the increase was driven by expansion within our existing customers.
Employee-related compensation expense increased by $200.6 million due to $181.9 million of stock-based compensation expense and related payroll taxes we recognized as the liquidity-based vesting condition for certain stock-based awards was met upon our IPO.
Employee-related compensation expense increased by $159.9 million due to $154.4 million of stock-based compensation expense and related payroll taxes we recognized as the liquidity-based vesting condition for certain stock-based awards was met upon our IPO.
In September 2024, we issued $75.0 million in aggregate principal amount of our 3.00% Convertible Senior PIK Toggle Notes due 2029 (the "2029 Notes" and, together with the 2028 Notes, the "Convertible Notes"), pursuant to an indenture, dated as of September 30, 2024 (the "2029 Notes Indenture" and, together with the 2028 Notes Indenture, the "Indentures"), between us and the Trustee.
In September 2024, we issued $75.0 million in aggregate principal amount of our 3.00% Convertible Senior PIK Toggle Notes due 2029 (the "2029 Notes" and, together with the 2028 Notes, the "Convertible Notes"), pursuant to an indenture, dated as of September 30, 2024, as supplemented by that certain First Supplemental Indenture, dated as of September 19, 2025 (the "2029 Notes Indenture" and, together with the 2028 Notes Indenture, the "Indentures"), between us and the Trustee.
Recent Accounting Pronouncements For a description of our recently adopted accounting pronouncements and recently issued accounting standards not yet adopted, see Note 2 "Basis of Presentation and Summary of Significant Accounting Policies" in the notes to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for more information.
Recent Accounting Pronouncements For a description of our recently adopted accounting pronouncements and recently issued accounting standards not yet adopted, see Note 2 "Basis of Presentation and Summary of Significant Accounting Policies" in the Notes to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
We received aggregate proceeds of $992.2 million after deducting the underwriting discounts and commission payable by us. In addition, in connection with the IPO, all outstanding shares of convertible preferred stock were automatically converted into 218,897,608 shares of Class B common stock.
We received net proceeds of approximately $992.2 million after deducting underwriting discounts and commissions of $52.2 million. In addition, in connection with the IPO, all outstanding shares of convertible preferred stock were automatically converted into 218,897,608 shares of Class B common stock.
Prior to the completion of IPO, the fair value of the Convertible Notes was estimated using scenario-based binomial lattice model. The scenarios consist of (a) Scenario 1 - likelihood of achieving a liquidity event, such as an IPO, and (b) Scenario 2 - the Company will remain private.
Prior to the IPO, the fair value of the Convertible Notes was measured using a scenario-based binomial lattice model. The scenarios consisted of (a) Scenario 1 - likelihood of achieving a liquidity event, such as an initial public offering ("IPO") and (b) Scenario 2 - we will remain private.
A portion of our operating expenses are incurred outside the United States, denominated in foreign currencies and subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Indian Rupee, Taiwanese Dollar, and Euro.
A portion of our operating expenses are incurred outside the United States, denominated in foreign currencies and subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Indian Rupee, Taiwanese Dollar, and Euro. Our consolidated results of operations and cash flows may be adversely affected in the future due to changes in foreign exchange rates.
In addition, the colocation and network transit expenses increased by $5.8 million which partially offset by a $2.0 million decrease in amortization of intangible assets, a $1.7 million decrease in cloud infrastructure and software expenses, and a $1.7 million decrease in data center depreciation.
In addition, colocation and network transit expenses increased by $8.7 million which was partially offset by a $5.8 million decrease in amortization of intangible assets and a $3.3 million decrease in cloud infrastructure and software expenses.
Because we have a valuation allowance on our U.S. deferred tax assets, the tax law did not impact tax expense or cash paid for taxes for the three and nine months ended October 31, 2025, when the law was enacted.
Because we have a valuation allowance on our U.S. deferred tax assets, the tax law did not impact tax expense or cash paid for taxes for fiscal 2026 when the law was enacted.
Components of Results of Operations Revenue We generate revenue primarily from subscriptions to the more than 20 products within our Netskope One platform, along with related support services. During the three and nine months ended October 31, 2025 and 2024, subscription revenue accounted for approximately 99% of the Company's total revenue.
Components of Results of Operations Revenue We generate revenue primarily from subscriptions to the more than 25 products within our Netskope One platform, along with related support services. Subscription revenue accounted for approximately 99% of the Company's total revenue in fiscal 2026 and fiscal 2025.
Employee-related compensation expense increased by $123.6 million due to $121.3 million of stock-based compensation expense and related payroll taxes we recognized as the liquidity-based vesting condition for certain stock-based awards was met upon our IPO.
Employee-related compensation expense increased by $94.5 million due to $70.3 million of stock-based compensation expense and related payroll taxes we recognized as the liquidity-based vesting condition for certain stock-based awards was met upon our IPO. The remaining increase in employee-related compensation expense was primarily driven by growth in headcount.
As our business expands, we expect our general and administrative expenses will increase in dollar amount to support our growth, but over the long term, we expect our general and administrative expenses as a percentage of revenue to decrease. Loss on Changes in Fair Value of Convertible Notes We issued Convertible Notes in December 2022 and September 2024.
As our business expands, we expect our general and administrative expenses will increase in dollar amount to support our growth, but over the long term, we expect our general and administrative expenses as a percentage of revenue to decrease.
Employee-related compensation expense increased by $195.6 million due to $186.0 million of stock-based compensation expense and related payroll taxes we recognized as the liquidity-based vesting condition for certain stock-based awards was met upon our IPO. In addition, outside services increased by $1.6 million.
Employee-related compensation expense increased by $241.9 million due to $206.0 million of stock-based compensation expense and related payroll taxes we recognized as the liquidity-based vesting condition for certain stock-based awards was met upon our IPO. The remaining increase in employee-related compensation expense was primarily driven by growth in headcount. In addition, outside services increased by $8.4 million.
As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. Ite m 3.
As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. 80 Table of Contents Ite m 7A. Quantitative and Qualitative Disclosures About Market Risk.
Following the IPO, the fair value of the Convertible Notes is estimated using a single-scenario lattice approach that incorporates the trading price of the Company's Class A common stock data, risk-free interest rate, and estimated credit spread.
Following the IPO, the fair value of the Convertible Notes is measured using a single-scenario lattice model that incorporates the trading price of the Company's Class A common stock data, risk-free interest rate, and estimated credit spread. We performed sensitivity analyses on the key inputs and assumptions used in determining the estimated fair value of Convertible Notes.
We expect to expand our market presence both domestically and internationally, educate potential customers about the benefits of our platform and products, and drive both customer acquisition and retention.
Our sales and marketing strategies are comprehensive, involving direct sales efforts, channel partnerships, and digital marketing initiatives. We expect to expand our market presence both domestically and internationally, educate potential customers about the benefits of our platform and products, and drive both customer acquisition and retention.
To meet the related tax withholding requirements for RSUs settled, we withheld 5,960,339 of the 14,009,204 shares of Class B common stock issuable to holders of vested RSUs. Based on the IPO price of $19.00 per share, the tax withholding obligation was $113.2 million, which was paid within the quarter.
To meet the related tax withholding obligation for the RSUs settled during the third quarter of fiscal 2026, we withheld 5,960,339 shares out of the 14,009,204 shares of Class B common stock issuable to the holders of such vested RSUs, and paid the withholding taxes based on the IPO price per share for the total shares withheld.
The number of shares of Class B common stock that would be issuable upon conversion of the Convertible Notes are as follows (in thousands, except share amounts): As of October 31, 2025 As of Maturity Date Aggregate Principal and Accrued and Unpaid Interest Shares of Class B Common Stock Issuable Upon Conversion Aggregate Principal and Accrued and Unpaid Interest Shares of Class B Common Stock Issuable Upon Conversion 2028 Notes $ 446,130 18,784,140 $ 501,293 21,106,738 2029 Notes 77,775 3,148,793 87,003 3,522,396 Total $ 523,905 21,932,933 $ 588,296 24,629,134 Holders of the Convertible Notes are also entitled to convert such Convertible Notes upon certain corporate transactions or if we call Convertible Notes for redemption following a change in tax law.
The number of shares of Class B common stock that would be issuable upon conversion of the Convertible Notes are as follows (in thousands, except share amounts): As of January 31, 2026 As of Maturity Date Aggregate Principal and Accrued and Unpaid Interest Shares of Class B Common Stock Issuable Upon Conversion Aggregate Principal and Accrued and Unpaid Interest Shares of Class B Common Stock Issuable Upon Conversion 2028 Notes $ 450,383,116 18,963,200 $ 501,292,935 21,106,738 2029 Notes 78,368,364 3,172,805 87,003,254 3,522,396 Total $ 528,751,480 22,136,005 $ 588,296,189 24,629,134 Holders of the Convertible Notes are also entitled to convert such Convertible Notes upon certain corporate transactions or if we call Convertible Notes for redemption following a change in tax law.
Since our inception, we have generated operating losses, as reflected in our accumulated deficit of $2.6 billion as of October 31, 2025. While we have historically incurred annual negative cash flows from operating activities since inception, we generated positive operating cash flow in the fourth quarter of fiscal 2025, first quarter of fiscal 2026, and third quarter of fiscal 2026.
While we have historically incurred annual negative cash flows from operating activities since inception, we generated positive operating cash flow in the fourth quarter of fiscal 2025 and in the first, third, and fourth quarters of fiscal 2026. We anticipate continued improvement in our operating cash flow over the long term.
We have elected to account for the Convertible Notes using the fair value option under Accounting Standards Codification ("ASC") 825, Financial Instruments. As a result, we are required 26 Table of Contents to determine the fair value of the Convertible Notes on a quarterly basis using a complex valuation model.
As a 69 Table of Contents result, we are required to determine the fair value of the Convertible Notes on a quarterly basis using a complex valuation model.
So long as the holders of the 2028 Notes have made no prior repurchase demand, holders of the 2028 Notes can, during the period beginning 120 days prior to the 2028 Note Maturity Date (or earlier, if we so choose) and ending 91 days prior to the 2028 Note Maturity Date, submit a repurchase demand requiring us to offer to repurchase their 2028 Notes at a repurchase price equal to the principal amount of such 2028 Notes and an amount equal to a rate of return of 14.0% per annum, compounded quarterly.
We would be required to repurchase the Convertible Notes at a price equal to the greater of (i) a specified premium, which shall be in an amount equal to the excess of (x) 140% of the principal amount of such Convertible Notes on or before the second anniversary of the issue date of the Convertible Notes, (y) 155% of the principal amount of such Convertible Notes after the second anniversary but on or before the third anniversary of the issue date of the Convertible Notes, or (z) 170% of the principal amount of such Convertible Notes after the third anniversary of the issue date of the Convertible Notes and (ii) the principal amount thereof and all accrued and unpaid interest thereon. 77 Table of Contents So long as the holders of the 2028 Notes have made no prior repurchase demand, holders of the 2028 Notes can, during the period beginning 120 days prior to the 2028 Note Maturity Date (or earlier, if we so choose) and ending 91 days prior to the 2028 Note Maturity Date, submit a repurchase demand requiring us to offer to repurchase their 2028 Notes at a repurchase price equal to the principal amount of such 2028 Notes and an amount equal to a rate of return of 14.0% per annum, compounded quarterly.
Contractual Obligations and Commitments As of October 31, 2025, our commitments consisted of (i) obligations under operating leases for offices and data centers on an undiscounted basis, of which $12.2 million is due within 12 months and $32.2 million is due thereafter, (ii) Convertible Note obligations, with an aggregate principal amount of $401 million, due in fiscal 2029 and an aggregate principal amount of $75 million due in fiscal 2030, and (iii) purchase obligations with various parties for products and services entered into in the normal course of business, of which $70.6 million is due within the next 12 months and $333.8 million is due thereafter.
Contractual Obligations and Commitments As of January 31, 2026, our commitments consisted of (i) obligations under operating leases for offices and data centers on an undiscounted basis, of which $12.8 million is due within 12 months and $30.6 million is due thereafter, (ii) Convertible Note obligations, with an aggregate principal amount of $401 million, due in fiscal 2029 and an aggregate principal amount of $75 million due in fiscal 2030, and (iii) purchase obligations with various parties relating to cloud infrastructure and data center costs, network transit expenses, sales and marketing activities, and software subscription arrangements, of which $56.5 million is due within the next 12 months and $262.3 million is due thereafter.
The total net proceeds we received in the IPO were approximately $992.2 million after deducting underwriting discounts and commissions of $52.2 million.
Liquidity and Capital Resources In September 2025, we completed our IPO, whereby we received net proceeds of approximately $992.2 million after deducting underwriting discounts and commissions.
Recent Developments In September 2025, we completed our initial public offering ("IPO"), in which we issued and sold an aggregate 54,970,000 shares of our Class A common stock at a public offering price of $19.00 per share, including 7,170,000 shares pursuant to the exercise 23 Table of Contents of the option granted to the underwriters to purchase additional shares.
Our Netskope One platform uses a unique architecture built from the ground up as a unified platform with a converged security, network, and analytics technology stack that runs on our NewEdge global private cloud network ("NewEdge network") to deliver highly secure and performant digital interactions. 66 Table of Contents Recent Developments In September 2025, we completed our IPO, in which we issued and sold an aggregate 54,970,000 shares of our Class A common stock at a public offering price of $19.00 per share, including 7,170,000 shares pursuant to the exercise of the option granted to the underwriters to purchase additional shares.
Our primary use of cash in our operating activities include payments for employee-related compensation expenses, contract acquisition costs, outside services, and other corporate expenditures.
Our primary use of cash in our operating activities include payments for employee-related compensation, contract acquisition costs, outside services, and other corporate expenditures. Net cash provided by operating activities was $38.1 million for fiscal 2026 as compared to the $110.7 million of net cash used in operating activities for fiscal 2025.
The change was 35 Table of Contents primarily due to purchase of marketable securities and property and equipment to support additional data center growth. These were partially offset by proceeds from the sale and maturity of marketable securities. Financing Activities Our primary source of cash provided by financing activities include proceeds from the issuance of common stock.
These were partially offset by the increase in sale and maturity of our marketable securities. Financing Activities Our primary source of cash provided by financing activities include proceeds from the issuance of common stock and the exercise of stock options.
Employee-related compensation expenses are the most significant component of operating expenses and consist of salaries, benefits, bonuses, stock-based compensation expense, and in the case of sales and marketing expenses, sales commissions. Operating expenses also include other non-employee costs such as cloud infrastructure expenses, office space costs, fees for third-party professional services, and costs associated with software and subscription services.
Operating expenses also include other non-employee costs such as cloud infrastructure expenses, office leases and facilities-related expenses, fees for third-party professional services, and costs associated with software and subscription services. Sales and Marketing Sales and marketing expenses consist primarily of employee-related compensation expenses, sales commissions, marketing campaigns, marketing events, brand-building activities, promotions, and travel and entertainment expenses.
We believe these non-GAAP measures offer our management and investors additional consistency and comparability with our historical financial performance, enabling more meaningful 33 Table of Contents period-to-period comparisons. These metrics are designed to remove the impact of certain variables that can fluctuate for reasons unrelated to our underlying operating performance.
We believe these non-GAAP measures offer our management and investors additional consistency and comparability with our historical financial performance, enabling more meaningful period-to-period comparisons.
Our primary use of cash for financing activities include payments for stock issuance costs, taxes related to the net share settlement of equity awards, and holdback payment related to business combination.
Our primary use of cash for financing activities include payments for stock issuance costs, tax withholding obligations related to the settlement of equity awards, and holdback payment related to business combination. 76 Table of Contents Net cash provided by financing activities was $895.4 million for fiscal 2026 as compared to the $109.9 million for fiscal 2025.
Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk As of October 31, 2025, we had a total of $1.2 billion of cash, cash equivalents, and marketable securities, which consisted primarily of money market funds, commercial paper, and corporate debt securities.
We have operations in the United States and internationally, and we are exposed to market risk in the ordinary course of our business. Interest Rate Risk As of January 31, 2026, we had a total of $1.2 billion of cash, cash equivalents, and marketable securities, which consisted primarily of money market funds, commercial paper, corporate debt securities, asset-back securities, U.S.
In addition, professional services increased by $1.4 million. 29 Table of Contents Loss on Changes in Fair Value of Convertible Notes Three Months Ended October 31, Change 2025 2024 $ % (in thousands, except percentages) Loss on changes in fair value of convertible notes $ (8,439 ) $ (18,125 ) $ 9,686 53 % Loss on change in fair value of Convertible Notes decreased by $9.7 million, or 53%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024.
In addition, professional services increased by $5.8 million. 72 Table of Contents Loss on Changes in Fair Value of Convertible Notes Year Ended January 31, Change 2026 2025 $ % (in thousands, except percentages) Loss on changes in fair value of convertible notes $ (34,256 ) $ (98,627 ) $ 64,371 (65 )% Loss on change in fair value of Convertible Notes decreased by $64.4 million, or 65%, in fiscal 2026 compared to fiscal 2025.
Cash Flows The following table shows a summary of our cash flows for the periods presented: Nine Months Ended October 31, 2025 2024 (in thousands) Net cash provided by (used in) operating activities $ 19,950 $ (116,798 ) Net cash (used in) provided by investing activities (98,643 ) 39,017 Net cash provided by financing activities 897,334 97,098 Operating Activities Our primary source of cash provided by operations is revenue.
Cash Flows The following table shows a summary of our cash flows for the periods presented: Year Ended January 31, 2026 2025 2024 (in thousands) Net cash provided by (used in) operating activities $ 38,073 $ (110,678 ) $ (167,166 ) Net cash (used in) provided by investing activities (666,867 ) 2,244 176,950 Net cash provided by financing activities 895,366 109,861 6,286 Operating Activities Our primary source of cash provided by operations is revenue.
Other Income, net Three Months Ended October 31, Change 2025 2024 $ % (in thousands, except percentages) Other income, net $ 5,407 $ 711 $ 4,696 660 % Other income, net increased by $4.7 million, or 660%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024.
Other Income, net Year Ended January 31, Change 2026 2025 $ % (in thousands, except percentages) Other income, net $ 18,782 $ 4,101 $ 14,681 358 % Other income, net increased by $14.7 million, or 358%, in fiscal 2026 compared to fiscal 2025.
These were partially offset by payments for deferred offering costs and taxes related to the net share settlement of equity awards.
The increase was primarily driven by the proceeds from our IPO and proceeds from the issuance of our common stock upon the exercise of stock options. These were partially offset by payments for deferred offering costs and tax withholding obligations related to the settlement of equity awards.
Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Unless the context otherwise requires, all reference in this Quarterly Report on Form 10-Q to "we", "us", "our", "our company", and "Netskope" refer to Netskope, Inc. and its subsidiaries.
Unless the context otherwise requires, all reference in this Annual Report on Form 10-K to "we", "us", "our", "our company", and "Netskope" refer to Netskope, Inc. and its subsidiaries. Unless otherwise indicated, references to our "common stock" include our Class A common stock and Class B common stock.
Provision for (Benefit from) Income Taxes Three Months Ended October 31, Change 2025 2024 $ % (in thousands, except percentages) Provision for (benefit from) income taxes $ 3,073 $ (505 ) $ 3,578 709 % Provision for income taxes increased by $3.6 million, or 709%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024, primarily due to the tax benefit from the establishment of deferred tax liability as part of the acquisition of Dasera, Inc. in third quarter of fiscal 2025 and higher foreign tax liabilities in fiscal 2026 in our foreign jurisdictions due to increased expansion internationally.
Provision for Income Taxes Year Ended January 31, Change 2026 2025 $ % (in thousands, except percentages) Provision for income taxes $ 11,335 $ 4,243 $ 7,092 167 % Provision for income taxes increased by $7.1 million, or 167%, in fiscal 2026 compared to fiscal 2025, primarily due to higher foreign tax liabilities in fiscal 2026 as a result of the expansion of our business internationally.
Gross profit increased by $90.8 million, or 37%, for the nine months ended October 31, 2025 compared to the nine months ended October 31, 2024, and gross margin increased to 66% from 64%, primarily due to faster revenue growth from new customer acquisition and expansion within our existing customer base, compared to slower cost of revenue growth from improved efficiencies managing our global data centers and cloud infrastructure operations.
Gross profit increased by $134.8 million, or 39%, in fiscal 2026 compared to fiscal 2025, and gross margin increased to 68% in fiscal 2026 from 65% in fiscal 2025. The gross margin expansion was primarily due to revenue growth driven by new customer acquisition and expansion within our existing customer base, which outpaced the growth in cost of revenue.
Comparison of the Nine Months Ended October 31, 2025 and 2024 Revenue Nine Months Ended October 31, Change 2025 2024 $ % (in thousands, except percentages) Revenue $ 512,667 $ 389,782 $ 122,885 32 % Revenue increased by $122.9 million, or 32%, for the nine months ended October 31, 2025 compared to the nine months ended October 31, 2024.
Comparison of the Fiscal Years Ended January 31, 2026 and 2025 Revenue Year Ended January 31, Change 2026 2025 $ % (in thousands, except percentages) Revenue $ 708,997 $ 538,268 $ 170,729 32 % Revenue increased by $170.7 million, or 32%, in fiscal 2026 compared to fiscal 2025.
The following table summarizes our cash flows and provides a reconciliation of free cash flow to net cash provided by (used in) operating activities and of our free cash flow margin to our net cash provided by (used in) operating activities as a percentage of revenue for each of the periods presented: Nine Months Ended October 31, 2025 2024 (in thousands, except percentages) Net cash provided by (used in) operating activities $ 19,950 $ (116,798 ) Less: Purchase of property and equipment and intangible assets (9,563 ) (35,774 ) Less: Capitalization of internal-use software costs (1,990 ) (2,579 ) Free cash flow $ 8,397 $ (155,151 ) Net cash provided by (used in) operating activities as a percentage of revenue 4 % (30 )% Free cash flow margin 2 % (40 )% We expect free cash flow and free cash flow margin to improve over the long term through continued operational efficiencies, scale benefits, and technological advancements. 34 Table of Contents Liquidity and Capital Resources Prior to our IPO, we have financed operations primarily through private placements of our equity securities, issuance of convertible notes, and payments received from our customers.
The following table summarizes our cash flows and provides a reconciliation of free cash flow to net cash provided by (used in) operating activities and of our free cash flow margin to our net cash provided by (used in) operating activities as a percentage of revenue for each of the periods presented: Year Ended January 31, 2026 2025 2024 (in thousands, except percentages) Net cash provided by (used in) operating activities $ 38,073 $ (110,678 ) $ (167,166 ) Less: Purchase of property and equipment and intangible assets (22,920 ) (37,032 ) (33,955 ) Less: Capitalization of internal-use software costs (2,780 ) (3,390 ) (7,197 ) Free cash flow $ 12,373 $ (151,100 ) $ (208,318 ) Net cash provided by (used in) operating activities as a percentage of revenue 5 % (21 )% (41 )% Free cash flow margin 2 % (28 )% (51 )% We expect free cash flow and free cash flow margin to improve over the long term through continued operational efficiencies, scale benefits, and technological advancements, however, the improvement is not expected to be linear.
Inherent in such policies are certain key assumptions and estimates made by management, which we believe best reflect our underlying business and economic conditions. Our estimates are based on historical experience and various other factors and assumptions that we believe are reasonable under the circumstances.
Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances, and we evaluate our estimates and assumptions on an ongoing basis. Actual results could differ significantly from the estimates made by management.
Sales and Marketing Nine Months Ended October 31, Change 2025 2024 $ % (in thousands, except percentages) Sales and marketing 297,295 217,391 $ 79,904 37 % Sales and marketing expenses increased by $79.9 million, or 37%, for the nine months ended October 31, 2025 compared to the nine months ended October 31, 2024.
Sales and Marketing Year Ended January 31, Change 2026 2025 $ % (in thousands, except percentages) Sales and marketing 393,742 280,828 $ 112,914 40 % Sales and marketing expenses increased by $112.9 million, or 40%, in fiscal 2026 compared to fiscal 2025.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes and the discussion under the heading "Management Discussion and Analysis of Financial Condition and Results of Operations" for the year ended January 31, 2025 included in the final prospectus dated September 17, 2025 and filed with the SEC pursuant to Rule 424(b)(4) on September 18, 2025 (the "Final Prospectus").
A discussion regarding our financial condition and results of operations for the fiscal year ended January 31, 2025 compared to the fiscal year ended January 31, 2024 can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the final prospectus for our initial public offering ("IPO") dated as of September 17, 2025 and filed with the SEC pursuant to Rule 424(b)(4) on September 18, 2025 (the "Final Prospectus") Overview We are redefining security and networking for the era of cloud and AI.
The following table provides a reconciliation of our non-GAAP gross profit to our gross profit and of our non-GAAP gross margin to our gross margin, for each of the periods presented: Three Months Ended October 31, Nine Months Ended October 31, 2025 2024 2025 2024 (in thousands, except percentages) Revenue $ 184,173 $ 138,532 $ 512,667 $ 389,782 Gross profit $ 106,643 $ 91,767 $ 339,400 $ 248,573 Add: Stock-based compensation expense and related taxes 28,602 589 29,543 1,930 Add: Amortization of acquired intangible assets 2,341 5,174 12,016 14,645 Non-GAAP gross profit $ 137,586 $ 97,530 $ 380,959 $ 265,148 Gross margin 58 % 66 % 66 % 64 % Non-GAAP gross margin 75 % 70 % 74 % 68 % We expect non-GAAP gross margin will increase over the long term through improved operational efficiencies, scale benefits, and technological advancements.
The following table provides a reconciliation of our non-GAAP gross profit to our gross profit and of our non-GAAP gross margin to our gross margin, for each of the periods presented: Year Ended January 31, 2026 2025 2024 (in thousands, except percentages) Revenue $ 708,997 $ 538,268 $ 406,883 Gross profit $ 482,669 $ 347,899 $ 243,250 Add: Stock-based compensation expense and related taxes 34,037 2,478 2,926 Add: Amortization of acquired intangible assets 14,358 20,965 20,112 Non-GAAP gross profit $ 531,064 $ 371,342 $ 266,288 Gross margin 68 % 65 % 60 % Non-GAAP gross margin 75 % 69 % 65 % We expect non-GAAP gross margin will increase over the long term through improved operational efficiencies, scale benefits, and technological advancements.
Research and Development Three Months Ended October 31, Change 2025 2024 $ % (in thousands, except percentages) Research and development $ 262,702 $ 62,402 $ 200,300 321 % Research and development expenses increased by $200.3 million, or 321%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024.
Research and Development Year Ended January 31, Change 2026 2025 $ % (in thousands, except percentages) Research and development $ 509,029 $ 254,189 $ 254,840 100 % Research and development expenses increased by $254.8 million, or 100%, in fiscal 2026 compared to fiscal 2025.
General and Administrative Three Months Ended October 31, Change 2025 2024 $ % (in thousands, except percentages) General and administrative $ 141,042 $ 17,434 $ 123,608 709 % General and administrative expenses increased by $123.6 million, or 709%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024.
General and Administrative Year Ended January 31, Change 2026 2025 $ % (in thousands, except percentages) General and administrative $ 232,477 $ 68,623 $ 163,854 239 % General and administrative expenses increased by $163.9 million, or 239%, in fiscal 2026 compared to fiscal 2025.
Provision for Income Taxes Nine Months Ended October 31, Change 2025 2024 $ % (in thousands, except percentages) Provision for income taxes $ 8,013 $ 3,127 $ 4,886 156 % Provision for income taxes increased by $4.9 million, or 156%, for the nine months ended October 31, 2025 compared to the nine months ended October 31, 2024, primarily due to the tax benefit from the establishment of deferred tax liability as part of the acquisition of Dasera, Inc. in third quarter of fiscal 2025 and higher foreign tax liabilities in fiscal 2026 in our foreign jurisdictions due to increased expansion internationally. 32 Table of Contents Non-GAAP Financial Measures We believe the following non-GAAP measures are useful in evaluating our operating performance.
In addition, we recognized a non-recurring tax benefit from the establishment of deferred tax liability as part of the acquisition of Dasera, Inc. in fiscal 2025. 73 Table of Contents Non-GAAP Financial Measures We believe the following non-GAAP measures are useful in evaluating our operating performance.
The increase was mainly due to a $4.9 million increase in interest income.
The increase was mainly due to a $9.1 million increase in interest income, a $3.7 million increase in foreign currency exchange gain, and a $2.2 million increase in the accretion of discounts on our investments in debt securities.
Net cash used in investing activities was approximately $98.6 million for the nine months ended October 31, 2025 as compared to the $39.0 million of net cash provided by investing activities for the nine months ended October 31, 2024.
Net cash used in investing activities was approximately $666.9 million for fiscal 2026 as compared to the $2.2 million of net cash provided by investing activities for fiscal 2025. The change was primarily due to the additional investment in marketable securities and purchases of property and equipment, primarily data center-related equipment.
Critical Accounting Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements and the related notes thereto, which have been prepared in accordance with GAAP. In preparing the 37 Table of Contents condensed consolidated financial statements, we apply accounting estimates that affect the reported amounts and related disclosures.
Critical Accounting Policies and Estimates Our consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K are prepared in accordance with U.S. GAAP. The preparation of consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures.
Employee-related compensation expense increased by $68.9 million due to $64.6 million of stock-based compensation expense and related payroll taxes we recognized as the liquidity-based vesting condition for certain stock-based awards was met upon our IPO. In addition, the amortization of capitalized sales commissions and marketing-related expenses increased by $5.3 million and $2.3 million, respectively.
In addition, amortization of capitalized sales commissions and marketing-related expenses increased by $7.8 million and $5.3 million, respectively.
All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future operating results and financial condition, our business strategy and plans, market growth, and our objectives for future operations, are forward-looking statements.
Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, particularly information with respect to our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, and includes forward-looking statements that involve risks and uncertainties as described under the heading “Special Note About Forward-Looking Statements” in this Annual Report on Form 10-K.
Removed
Item 6. Exhibits 90 Signatures 92 i Table of Contents SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties.
Added
Item 6. [Reserved] 65 Table of Contents It em 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K.
Removed
In some cases, you can identify forward-looking statements because they contain words such as “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” “aspire,” and similar expressions.
Added
You should review the disclosure under the heading “Risk Factors” in this Annual Report on Form 10-K for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.
Removed
These forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about: • our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses, including changes in operating expenses, and our ability to achieve and maintain profitability; • our business plan and our ability to effectively manage our growth; • our total market opportunity; • anticipated trends, growth rates, and challenges in our business and in the markets in which we operate; • adoption of our platform; • beliefs and objectives for future operations; • our ability to attract new customers and successfully retain, and increase adoption of our platform and offerings by, existing customers; • our ability to develop and introduce new products and bring them to market in a timely manner; • our expectations concerning relationships with third parties; • our ability to maintain, protect, and enhance our intellectual property rights; • our ability to expand internationally; • the effects of increased competition in our markets and our ability to compete effectively; • our ability to identify, recruit, hire, and retain skilled personnel, including key members of senior management; • future acquisitions or investments in complementary companies, products, technologies, or services; • our ability to stay in compliance with laws and regulations that currently apply, or may become applicable to, our business both in the United States and internationally; • our ability to maintain the security and availability of our platform and protect against data breaches and other security incidents; • economic and industry trends, projected growth, or trend analysis; • general economic conditions in the United States and globally, including the effects of changes in tariffs or trade restrictions, global geopolitical conflicts, inflation, interest rates, any instability in the global banking sector, and foreign currency exchange rates; • our ability to operate and grow our business in light of macroeconomic uncertainty; • increased expenses associated with being a public company; and • other statements regarding our future operations, financial condition, and prospects and business strategies.
Added
Our fiscal year ends on January 31, and our fiscal quarters end on April 30, July 31, October 31, and January 31. Our fiscal years ended January 31, 2026, 2025, and 2024 are referred to herein as fiscal 2026, fiscal 2025, and fiscal 2024, respectively.
Removed
We caution you that the foregoing list may not contain all of the forward-looking statements contained in this Quarterly Report on Form 10-Q.
Added
A discussion regarding our financial condition and results of operations for the fiscal year ended January 31, 2026 compared to the fiscal year ended January 31, 2025 is presented below.
Removed
We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results.
Added
Employee-related compensation expenses are the most significant component of operating expenses and consist of salaries, benefits, bonuses, stock-based compensation expense, and in the case of sales and marketing expenses, sales commissions.

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