NEW YORK, June 3, 2026, 19:05 EDT
Netskope dropped close to 20% after hours Wednesday, erasing its earlier session gain. The cybersecurity firm reported higher Q1 revenue but investors zeroed in on cash flow and sales execution. Shares finished up 2.6% at $12.40, then slid to $9.96 just after 7 p.m. EDT.
Netskope’s drop is notable as the company is a recent entrant to the public cloud and AI security software space. The Santa Clara firm came public at $19 a share in September, raising $908.2 million, but the late selloff pushed shares below that IPO price.
Netskope’s annual recurring revenue was up 29% year-over-year to $845 million, the company said. Revenue climbed 28% to $201.6 million. Adjusted loss tightened to 6 cents a share from 28 cents the previous year.
Netskope CEO Sanjay Beri said, “This is the era that Netskope was built for,” linking the wave of demand to customers seeking to rein in AI agents, sensitive data and cloud traffic. Netskope says its core message is that more AI inside big companies expands the attack surface, giving attackers more spots to hit. GlobeNewswire
The company raised its outlook for fiscal 2027 revenue, now guiding for $879 million to $883 million. For the second quarter, it’s targeting revenue between $213 million and $215 million. The company still sees a full-year adjusted loss per share of 18 cents. Free cash flow margin is pegged at 2% to 4%.
Traders seemed to shrug off the headline growth. Net new ARR came in at $34 million, falling from $39 million last year. Free cash flow sank to negative $57.2 million for the quarter, after showing positive $17.5 million a year ago.
Drew Del Matto, the CFO, told analysts that a lot of sales reps were still getting up to speed and moving to annual billing was delaying some cash collections. He called the first quarter the “low watermark” for that change. Benzinga
Netskope is set to change CFOs, with Del Matto planning to retire once a replacement is named. He’ll shift to an advisory post for some time after that. The company, which has yet to back up its post-IPO growth story, now faces more leadership uncertainty.
Netskope sells in the secure access service edge, or SASE, market, a set of cloud security and networking tools for apps, users, and data. Reuters has reported that Netskope is up against bigger players like Palo Alto Networks and Zscaler, which both already have major enterprise sales operations.
Netskope pushed its AI-security pitch this week, saying it launched Netskope One AI Command Center to help businesses find AI assets, understand the risks, and automate how they respond. Jennifer Glenn, research director for data and information security at IDC, called tools that mix AI discovery and risk correlation “essential” as firms deal with shadow AI and exposed data. Help Net Security
There’s a chance the second-half pickup could be slower than management hopes. If customers hold back on AI-security spending, sales efficiency stays volatile or cash flow takes more time to bounce back, the higher revenue target might not stabilize shares, which are already selling off after hours. The company warned its guidance is forward-looking and results might vary.
Netskope isn’t trading like it just beat earnings. It’s acting more like an execution name. Revenue is going up, but the market’s waiting for cash flow and ARR to improve.
