Netskope Rockets Ahead: Q2 Earnings Beat Expectations

Netskope, Inc. reported impressive second-quarter fiscal 2027 financial results on September 2, 2026. The company announced revenue of $220.5 million, exceeding its own guidance. Annual recurring revenue saw a significant 27% year-over-year increase, reaching $899 million.

Remaining performance obligations also surged by 36% to $1.35 billion. Following these strong results and an increased full-year guidance from management, eight financial analysts revised their price targets upward on September 3, 2026. This positive analyst reaction reflects growing confidence in Netskope's performance.

Key drivers for the quarter included strong customer retention and increased adoption of Netskope's platform. The number of customers generating over $100,000 in annual recurring revenue grew by 23% to 1,686, now comprising 87% of total ARR. Furthermore, 59% of customers utilized four or more Netskope products, an increase from 51% a year prior.

Despite these positive trends, the company is investing heavily in AI infrastructure, leading to a workforce reduction of approximately 5%. Non-GAAP operating margin improved to negative 9%, an 11-percentage-point increase. However, the company reported a negative free cash flow of $29.8 million for the quarter and projects a full-year free cash flow margin of only about 2%. The shift to annual billing contracts is also impacting cash collections, with about half of the sales force still in the ramp-up phase.