Eight Analysts Lift Netskope Targets as Cash Use Deepens

Eight analysts raised their price targets on Netskope after the cybersecurity company lifted its fiscal 2027 outlook on September 2. The moves followed second-quarter revenue of $220.5 million, up 29% from a year earlier.

Annual recurring revenue, a measure of subscription contracts, rose 27% to $899 million, Netskope reported. Contracted future revenue not yet recognized reached $1.4 billion at July 31, up 36% year over year.

The target increases came from RBC, BMO Capital, JPMorgan, Morgan Stanley, Piper Sandler, Baird, BTIG and Rosenblatt. Their new targets ranged from $16 at Morgan Stanley to $20 at RBC, Piper Sandler and Baird; all kept positive ratings.

Analysts pointed to expanding demand and the potential for Netskope’s AI-security products to lift growth. The company sells cloud security and networking tools, and said 59% of customers used at least four products, versus 51% a year earlier.

Cash flow remains the counterweight. Netskope used $29.8 million in free cash flow during the quarter, compared with $19.7 million a year earlier. For the first half of fiscal 2027, free cash flow was negative $87 million.

Management attributed much of the operating cash-flow decline to a shift from upfront payments on multi-year contracts to annual billing. That change delays collections, while the company continues to spend on growth; Netskope reported $1.1 billion in cash, equivalents and marketable securities at July 31.

The company now expects fiscal 2027 revenue of $888 million to $892 million and free-cash-flow margin of about 2%. Its next-quarter revenue forecast is $227 million to $229 million, making execution and cash collection key measures alongside AI-product demand.