Netskope Stock Surges on Strong Q2 Earnings and Raised Outlook

Netskope shares surged in pre-market trading after the cloud and AI security company announced fiscal second-quarter 2027 results that beat Wall Street estimates on revenue, profitability, and key growth metrics, prompting an upgraded full-year outlook.

Strong Q2 Performance Across Key Metrics

For the quarter ending July 31, 2026, Netskope reported revenue of $221 million, a 29% year-over-year increase that exceeded the consensus estimate of $214.2 million. The company posted an adjusted loss per share of $0.03, which was significantly narrower than the $0.07 loss analysts had forecast.

Several key performance indicators pointed to sustained demand for its security platform. The company reported:

• Annual recurring revenue (ARR) climbed 27% year-over-year to $899 million.
• Remaining performance obligations (RPO), an indicator of future revenue, jumped 36% to $1.35 billion.
• Net revenue retention improved to 114%, signaling strong customer retention and expansion.

Margin Expansion and Upgraded Outlook

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Beyond top-line growth, Netskope demonstrated significant operational improvement. Its non-GAAP operating margin expanded by 11 percentage points year-over-year to negative 9%, far better than its own guidance of negative 14% to 15%. Non-GAAP gross margin also widened to 77%.

Based on the strong performance, management lifted its full-year fiscal 2027 revenue forecast to a range of $888 million to $892 million. Crucially, the company now expects to achieve a positive free-cash-flow margin of approximately 2% for the full year, a key milestone underscoring its progress toward sustainable profitability.

Market and Analyst Reaction

The positive results drove Netskope stock up 11.3% to $15.30 in pre-open trading, a move attributed entirely to the company's performance as the broader S&P 500 was flat. In response to the earnings beat, RBC Capital analyst Matthew Hedberg raised his price target on the stock to $18 from $13, reiterating an Outperform rating and citing confidence in the company's AI security growth prospects.