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    NTSK
    Earnings call· Apr 2026(Q1 FY27)

    Netskope Q1 FY27 earnings call NTSK

    Jun 3, 2026 Source

    Executive summary

    Netskope Q1 FY27 — Strong ARR Growth and AI Security Momentum

    Netskope delivered a strong Q1 FY27, driven by robust ARR growth, revenue exceeding guidance, and improved operating margins, signaling continued platform adoption and early success in AI security. The company is scaling its go-to-market engine, with a significant portion of sales reps ramping, expected to drive accelerated growth in the second half of the fiscal year. This quarter also marks the planned retirement announcement of CFO Drew Del Matto, who will remain committed through the transition.

    Highlights

    5

    • ARR reached $845 million, up 29% year-over-year.

    • Revenue grew 28% year-over-year to $202 million, exceeding guidance.

    • Operating margin improved 4 percentage points year-over-year to negative 14%, ahead of guidance.

    • ARR from new logos grew approximately 60% year-over-year.

    • AI Security product pipeline is the fastest growing in company history.

    Concerns

    3

    • Net new ARR was $34 million, down from $39 million in Q1 last year due to tough comparable periods.

    • Free cash flow was negative $57 million in Q1 FY27.

    • Sales and marketing expenses increased as a percentage of revenue due to continued investment in quota-carrying sales reps.

    Guidance & targets

    8
    CategoryTargetConfidence
    Q2 FY27 Revenue
    $213 million to $215 million
    high materiality
    High
    Q2 FY27 Operating Margin
    negative 14% to 15%
    medium materiality
    High
    Q2 FY27 Net Loss Per Share
    $0.06 to $0.07
    medium materiality
    High
    FY27 Revenue
    $879 million to $883 million
    high materiality
    High
    FY27 Gross Margin
    approximately 77%
    medium materiality
    High
    FY27 Operating Margin
    negative 9.5% to 10%
    high materiality
    High
    FY27 Net Loss Per Share
    $0.18
    medium materiality
    High
    FY27 Free Cash Flow Margin
    2% to 4%
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Americas
    Revenue grew 27% year-over-year in Q1 FY27.
    		—27%——
    EMEA
    Revenue grew 31% year-over-year in Q1 FY27.
    		—31%——
    APJ
    Revenue grew 25% year-over-year in Q1 FY27.
    		—25%——

    Operational metrics

    15
    Cash, cash equivalents and marketable securities
    $1.1 billion
    Q1 FY27

    As of the end of Q1 FY27.

    Operating expenses
    $184 million
    Q1 FY27

    Non-GAAP operating expenses.

    R&D expenses as % of revenue
    37%improved ~300 bps YoY
    Q1 FY27

    Non-GAAP R&D expenses, reflecting structural leverage and velocity of unified common code fabric.

    Net loss per share
    $0.06
    Q1 FY27

    Non-GAAP net loss per share.

    Fully diluted share count
    508 million
    Q1 FY27

    As of April 30, 2026.

    Sales reps ramping
    approximately 50%
    Q1 FY27

    Approximately half of reps are either newly hired or still ramping, expected to drive growth in H2 FY27.

    AI applications used by average Global 2000 company
    over 140
    Q1 FY27

    Tracked in Netskope's AI Index.

    AI usage led by business units
    approximately 90%
    Q1 FY27

    Occurs through shadow AI outside traditional governance controls.

    AI-generated content consumption per GB shared
    more than 4 gigabytes
    Q1 FY27

    Netskope research indicates for every gigabyte of data shared with AI tools.

    Netskope AI Labs models
    more than 190
    Q1 FY27

    Deployed throughout Netskope products.

    NewEdge private cloud data centers
    more than 120
    Q1 FY27

    Globally distributed, providing data sovereignty and regulatory compliance.

    Median enterprise running AI apps
    60
    Q1 FY27

    Netskope Threat Labs data.

    Power users interacting with AI apps
    more than 500
    Q1 FY27

    Netskope Threat Labs data.

    DLP AISecOps Agent beta trial efficiency
    approximately 100 actionable cases
    Q1 FY27

    A global consulting firm reduced 14 million alerts and 2 million incidents per day to approximately 100 actionable cases for human review.

    POC win rate
    over 80%
    Q1 FY27

    Consistent win rate when customers reach Proof of Concept stage.

    Industry KPIs

    14
    MetricValueDetails
    Capacity CAPEXmore than 120data centers
    Revenue growth$201.6 millionUSD
    Arr net new arr$845 millionUSD
    Rpo current rpoover $1.2 billionUSD
    Pricing model mixper transaction
    Customer account count1,600customers
    Large customer cohorts1,600customers
    Large deal new logo metricsapproximately 60%%
    Gross retention renewal rateabove mid-90s%
    Multi product platform attach57%%
    Operating FCF margin rule of 40negative 14%%
    Ai product adoption monetizationfastest we have seen
    Net revenue net dollar retention113%%
    Headcount internal ai productivitymore than doublepace

    Orderbook & backlog

    4
    ARR$845 millionQ1 FY27

    up 29% year-over-year

    Net new ARR$34 millionQ1 FY27

    compared to $39 million in Q1 last year

    Faced a tough year-over-year comparison with Q1 FY26 benefiting from multiple 7-figure expansion deals that drove outsized net new ARR growth of 79% year-over-year.

    Remaining performance obligations (RPO)over $1.2 billionQ1 FY27

    grew 33% year-over-year

    Contracted future billings71%Q1 FY27

    grew 71%

    Product announcements

    5
    ProductTypeDetails
    AI Command Centerlaunch
    AgentSkopelaunch
    DLP AISecOps Agentlaunch
    Five additional AgentSkope agentslaunch
    AI Security suite (Agentic Broker, AI Guardrails, AI Gateway, Red Teaming)launch

    Deals & partnerships

    6
    Deloittealliance expansion

    Expanded alliance to include a managed SASE service for enterprise customers seeking to transform their infrastructure, modernize security networking, and drive secure AI adoption.

    AnthropicProject Glasswing membership and technology collaboration

    Joined Anthropic's Project Glasswing to use access to Claude Mythos preview to identify vulnerabilities and harden defenses. Also includes integration with the Claude compliance API for unified data governance and compliance controls.

    OpenAIDaybreak Program membership

    Member of OpenAI's Daybreak Program, using GPT 5.5 with Trusted Access for cyber, recognized as a trusted defender of critical enterprise infrastructure for the AI era.

    Googlepartnership

    Partnered to introduce AI guardrails powered by Google Cloud GPUs and Vertex AI, enabling enterprises to deploy high-performance generative AI and agentic workflows with in-line safety checks and local data processing.

    NVIDIAoptimization

    Netskope's AI guardrail solution is natively optimized to run on NVIDIA GPUs.

    AWS, Azure, Google Cloudmarketplace availability

    Netskope products are available on the AWS, Azure, and Google Cloud marketplaces, providing security where enterprises build and run AI workloads.

    Risks & headwinds

    3
    Tough year-over-year comparison for net new ARRQ1 FY27

    Net new ARR was $34 million in Q1 FY27, compared to $39 million in Q1 FY26.

    Mitigation: Q1 FY26 benefited from multiple outsized 7-figure upsell deals, driving 79% YoY growth in net new ARR, setting a very high bar for comparison. Expect net new ARR acceleration in H2 FY27.

    Sales rep ramping impacting near-term growthQ2 FY27, impacting year-over-year comparison

    Approximately half of sales reps are either newly hired or still ramping.

    Mitigation: Expect the increase in reps to be a meaningful driver of growth in the back half of FY27 as they mature and hit their stride. Hiring is tracking according to plan.

    Transition to annual billing impacting free cash flowQ1 FY27

    Free cash flow was negative $57 million in Q1 FY27.

    Mitigation: This was the low watermark of the transition, with improvement expected in Q2 and a return to positive quarterly free cash flow in the back half of the year. Full-year FY27 FCF margin guidance is 2% to 4%.

    Q&A highlights

    8

    How confident is Netskope in its AI product market fit, especially given the rapid growth of AI companies, and why is net new ARR lower despite increased S&M spend?

    Sanjay highlighted the recent release of AI security products, the fastest-growing pipeline in company history, an 80%+ POC win rate, and record high gross retention rates. He attributed the net new ARR dip to tough prior-year comparisons and expects acceleration in H2 FY27 as new sales reps ramp.

    “For us, when customers try our technology, they love it. We have the highest GRR we've ever had in our history. We grew new logos by close to 60% year-on-year.”

    asked by Brad Zelnick · answered by Sanjay Beri

    3 min read7 chapters

    Detailed Narrative

    01

    AI-Native Platform and Market Opportunity

    Netskope's platform is designed for the cloud and AI era, addressing a massive $336 billion market opportunity. The Netskope One platform unifies over 25 security, networking, analytics, and AI products through a single engine, console, network, and code base. This architecture, underpinned by the high-performance NewEdge private cloud with over 120 data centers, differentiates Netskope by delivering best-in-class security without compromising network performance, a critical factor as customers adopt AI.

    02

    AI Security Imperative and Market Dynamics

    Enterprises face a rapidly widening AI security gap, with the average Global 2000 company using over 140 AI applications and approximately 90% of AI usage occurring through shadow IT. Netskope's AI-native platform, built to understand API and JSON traffic, provides granular dynamic policy controls and deep context, enabling customers to secure AI adoption without compromising user experience. The company's proprietary advantage stems from over a decade of processing real-world traffic and embedding anonymized insights into its platform.

    03

    Strategic AI Partnerships and Ecosystem Involvement

    Netskope is deeply integrated into the AI ecosystem, having joined Anthropic's Project Glasswing to identify vulnerabilities and harden defenses, and OpenAI's Daybreak Program as a trusted defender of critical enterprise infrastructure. Partnerships with Google Cloud and NVIDIA ensure Netskope's AI guardrails are optimized for performance and available across major cloud marketplaces (AWS, Azure, Google Cloud), positioning it as the security layer for diverse AI workloads.

    04

    New AI Security Product Suite and Early Adoption

    Netskope recently launched its AI Security suite, including Agentic Broker, AI Guardrails, AI Gateway, and Red Teaming, which are priced per transaction. The market response has been immediate, generating the fastest-growing product pipeline in company history and securing early deals with beta customers, including a U.S. fintech and a large U.S. bank. The company also unveiled the AI Command Center for end-to-end operational intelligence and AgentSkope, an architectural foundation for autonomous AI agents to assist SecOps and NetOps teams.

    05

    Customer Wins and Broad Platform Adoption

    Q1 FY27 saw significant customer wins, including a 7-figure deal with a Fortune 500 U.S. financial services company adopting 15 Netskope products, a leading Latin American utility, an APJ telecom and MSP for a large SASE branch modernization, and a major manufacturer. These wins highlight Netskope's ability to modernize infrastructure, consolidate vendors, and provide comprehensive data protection and AI usage control. Platform adoption continues to increase, with 57% of customers using 4 or more products, up from 49% a year ago.

    06

    Internal AI Transformation and Go-to-Market Scaling

    Netskope is applying its AI-native philosophy internally, particularly in R&D, to accelerate product development and bring new offerings to market at an unprecedented🌐 pace. The company's sales force expansion is tracking according to plan, with approximately half of its reps newly hired or still ramping. These investments are expected to drive significant growth in the second half of FY27 as productivity increases.

    07

    CFO Transition

    Drew Del Matto announced his intention to retire after more than seven years with Netskope, during which he played a critical role in scaling the company and leading its recent IPO. He will remain fully committed as CFO through the search process and hiring of his successor, transitioning to an advisory role thereafter. This planned transition does not alter the company's strategy, priorities, or confidence in future opportunities.

    AI-generated summary of the company’s earnings call. Not investment advice.