The technology sector has been replete with several IPOs this year, primarily led by fintech. However, companies from the cybersecurity sector have shied away from going public in one of the hottest IPO markets in a long time, with SailPoint (SAIL) being a notable exception, which actually made a comeback in the public markets.

This is set to change with Santa Clara, CA-based Netskope (NTSK).

About Netskope

Founded in 2012, Netskope is a cloud-security company specializing in protecting enterprise data and applications in cloud environments, with products centered on Secure Access Service Edge (SASE), zero trust, cloud data loss prevention, threat protection, secure web gateways, firewall-as-a-service, etc.

Starting trading today under the ticker NTSK, Netskope had raised its price range to $17-$19 from $15-$17, citing strong demand. At the market's open, it started trading even higher at $23. The company is seeking to raise about $908.2 million by offloading 47.8 million shares at a valuation of approximately $7.26 billion. It intends to use the net proceeds for working capital or other general corporate purposes.

Undoubtedly, Netskope's new listing allows investors to subscribe to the IPO of a cybersecurity company, a rarity recently. But is rarity enough of a reason to jump into NTSK stock, or is there a more compelling reason here? Let's find out.

Steady Financials

For a company operating in a high-growth space such as cybersecurity, Netskope's financials look decent. Granted, the company is still a loss-making one, but its revenues increased by 32.3% from the previous year to $538.3 million, with the first six months of fiscal 2025, ending July 31, also witnessing a strong 30.7% year-over-year (YOY) growth to $328.5 million. In fact, losses have also narrowed in the same period to $169.5 million from $206.7 million in the year-ago period. In FY 2025, the net losses were at $354.5 million, a tad wider than FY 2024's $344.9 million.

This trend continued in terms of net cash flow from operating activities as well. For the six months ended July 31, the company reported a net cash flow from operating activities of $8.7 million. This was an outflow of $105.9 million in the same period a year ago. Coming to the full fiscal year that ended Jan. 31, 2025, the company's net cash outflow from operating activities narrowed to $110.7 million from $167.2 million in the previous year. Overall, Netskope's cash balance as of July 31 stood at $210.8 million, much higher than its short-term debt levels of $10.4 million, alleviating any liquidity concerns.

Since Jan. 31, 2022, there’s been a marked uptick in multi-product adoption. By July 31, 2025, 72% of customers were subscribed to at least three products, 51% to four or more, and 35% to five or more. These figures are up from 52%, 29%, and 18%, respectively, at the start of 2022, reflecting stronger cross-selling and deeper engagement over time. Notably, customer count increased as well to 4,317 as of July 31 from 3,571 in the year-ago period, with customers of over $1 million ARR (annual revenue run-rate) rising to 111 from 84 in the previous year. Lastly, the company's net revenue retention rate stood at 118% versus 113% in the prior year, reflecting strong demand for the company's offerings and customer stickiness.

Netskope Can Make Its Place in a Growing Market

As artificial intelligence (AI) continues to gain mainstream adoption, the data center security market is also expected to thrive as a bulwark against bad actors. According to this report, the market is set to soar from about $18 billion in 2025 to $50 billion in a decade.

But how can Netskope become a player of any significance in a market where it is competing with much larger and storied incumbents such as Palo Alto (PANW), IBM (IBM), Check Point Software (CHKP), and Broadcom (AVGO), among others?

Well, Netskope’s growth blueprint revolves around increasing its share of business from existing customers, expanding into the U.S. public sector, strengthening its footprint in international markets, and exploring product expansion through mergers and acquisitions. Central to this approach is the Netskope One platform, which brings together two core elements: Security Service Edge and the broader Secure Access Service Edge framework that merges SSE with SD-WAN capabilities.

This unified platform is designed to replace a patchwork of point solutions such as secure web gateways, cloud access security brokers, firewalls, and zero trust network access tools with a single, integrated system. Supporting this is the company’s NewEdge network, a privately operated cloud that underpins Netskope’s infrastructure and is built to deliver low-latency performance, broad peering, and high reliability across a globally distributed SSE and SASE environment. In addition, Netskope’s depth in device classification distinguishes it from competitors who often focus more narrowly on user endpoints rather than on comprehensive device-level intelligence.

These factors have secured Netskope's repeated recognition as a leader in Security Service Edge in Gartner’s Magic Quadrant, underscoring its strength in this category. 

Yet the company also faces criticism for its pricing. While its features and performance are generally regarded as best-in-class, the cost of licensing, onboarding, and managing the platform can be significant compared with leaner, lower-priced alternatives. For smaller organizations or those with simpler requirements, that premium in cost, complexity, and implementation can tilt the balance toward competing offerings that are less feature-rich but more economical.

Final Take

Netskope is on the right track, with its financials improving, a growing customer base that sticks around, and losses narrowing. Moreover, its products are gaining traction each year, with industry recognition coming in as well.

However, the company may find itself in a tricky situation, as to continue on its growth path, it must broaden its range of users. But its relatively expensive offerings make that a key headwind for the company, as Netskope's products can be availed by enterprises only of a certain size and scale. However, this can hurt profitability, and the company should preferably focus on catering to high-value customers by growing margins there.

In terms of subscription to the IPO, Netskope can be considered, but with caution.