Netskope Reports 33% Year-over-Year Revenue Growth to $184.2 Million in Q3
- Annual Recurring Revenue Growth: As of October 31, 2025, Netskope's Annual Recurring Revenue (ARR) increased by 34% year-over-year to $754 million, indicating strong demand in the cloud security and networking sectors, which solidifies its market leadership.
- Improved Cash Flow Performance: The net cash provided by operating activities for Q3 was $11.2 million, representing 6% of revenue, marking a significant turnaround from negative cash flow in the same period last year, demonstrating ongoing improvements in operational efficiency and financial health.
- Growth in Remaining Performance Obligations: Netskope's Remaining Performance Obligations surpassed $1 billion, reflecting a 41% year-over-year increase, which indicates sustained customer demand for its products and enhances investor confidence in the company's long-term growth potential.
- Successful IPO Financing: The company raised $992.2 million in its initial public offering in September, netting approximately $880 million, providing robust funding for future expansion and technology investments, thereby advancing its market strategy.
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- Market Rebound Expectations: JPMorgan believes that while the market's outlook on AI disruption in the software sector is overly pessimistic, certain software companies are demonstrating greater resilience, potentially providing rebound opportunities for investors, especially given the current overly bearish sentiment.
- Extreme Price Volatility: Analysts point out that the extreme price action in software stocks has led to unrealistic expectations regarding AI disruption, which may prompt a rotation back into higher-quality companies, thereby improving portfolio performance.
- AI Profitability Gains: Companies in the S&P 500 that have adopted AI have seen net margins expand by approximately 2 to 3 percentage points more than their peers, indicating that AI technology is already delivering productivity gains and reflecting that corporate adoption is enhancing profitability.
- ETF Performance Decline: The State Street SPDR S&P Software & Services ETF (NYSE:XSW) is down 20.58% year-to-date, illustrating the overall pessimistic sentiment towards the software sector, despite some companies potentially benefiting from AI infrastructure demand.
Market Impact: The software sector has experienced a $2 trillion loss due to concerns over potential disruptions from artificial intelligence technology.
Investment Perspective: Analysts at J.P. Morgan view this downturn as a buying opportunity and have identified several AI-resistant companies, including Microsoft and CrowdStrike.
Market Impact: The software sector has experienced a significant decline, losing approximately $2 trillion due to concerns over potential disruptions from artificial intelligence technology.
Investment Perspective: Analysts at J.P. Morgan view this downturn as a potential buying opportunity and have identified a list of companies that are resistant to AI-related disruptions.
- Ownership Change: On January 6, Netskope CFO Andrew Del Matto executed a direct open-market sale of 49,875 shares for a total of $855,800, reflecting a structurally driven transaction due to the conversion of derivative securities, reducing his direct holdings to 41,493 shares while still indicating confidence in the company's future.
- Financial Context: The average sale price was $17.16 per share, while the post-transaction value of his direct holdings at market close was $719,500, suggesting that despite stock price fluctuations, Del Matto maintains significant equity exposure.
- Company Performance: Netskope's most recent quarter saw a 33% year-over-year revenue increase to $184.2 million, with annual recurring revenue climbing 34% to $754 million, demonstrating strong growth momentum in the cloud security market that should attract long-term investor interest.
- Cash Flow Position: At quarter-end, Netskope had approximately $1.2 billion in cash and marketable securities, providing ample financial flexibility to support future growth, and despite a 13% decline in stock price since its IPO, the fundamentals remain robust.
- Significant Revenue Growth: Netskope reported $184.17 million in revenue for Q3 2026, marking a 33% year-over-year increase that exceeded expectations by $8.12 million, demonstrating strong demand driven by cloud modernization and AI.
- Earnings Per Share Beat: The company posted an EPS of negative $0.10, surpassing expectations by $0.15, indicating positive signals in profitability recovery and boosting market confidence.
- Annual Recurring Revenue Surge: As of October 31, 2025, Netskope's ARR grew by 34% year-over-year to $754 million, showcasing the company's strong performance in market share and financial health.
- Analysts Optimistic About Future: Meta Marshall from Morgan Stanley reiterated a Buy rating with a $27 price target, anticipating a healthy growth rate of 25% to 30% annually, reflecting strong market confidence in the company's ongoing expansion.

U.S. Stock Market Performance: U.S. stocks declined, with the Dow Jones index dropping over 100 points on Tuesday.
Cementos Pacasmayo Surge: Shares of Cementos Pacasmayo SAA rose 47.4% to $10.30 after Holcim agreed to purchase a majority stake in its parent company.
Notable Stock Gains: Several companies saw significant stock increases, including Rezolve AI PLC (23.7%), Emerald Holding Inc (17%), and Tilray Brands Inc (15%).
Strategic Moves and Buybacks: Sezzle Inc announced a $100 million stock buyback, while Emerald Holding is reviewing strategic options following acquisition inquiries.








