Cloud and AI security demand is fueling growth for mid-sized cybersecurity firm Netskope, Inc. (NASDAQ: NTSK), as its fiscal second-quarter performance exceeded market expectations with revenue climbing 29% year-over-year and losses narrowing. The company also raised its full-year guidance, sending shares up more than 10% in pre-market trading.

Currently valued at approximately $5.7 billion, Netskope, Inc. is positioning itself as a comprehensive platform rather than a point solution, putting it in direct competition with larger cybersecurity players such as CrowdStrike and Palo Alto Networks. The Santa Clara, California-based company leverages its Netskope One platform and NewEdge private cloud network to help enterprises safeguard data, cloud applications, networks, and AI systems from cyber threats.

Quarterly revenue reached $221 million, up from $170.8 million in the same period last year and surpassing Wall Street's expectation of $214.2 million. Adjusted loss per share was $0.03, narrower than the analyst-estimated loss of $0.07 per share. Annual recurring revenue (ARR) grew 27% to $899 million, while remaining performance obligations (RPO) surged 36% to $1.35 billion. Gross margin also expanded to 77% from 75% in the prior-year period.

Chief Executive Officer Sanjay Beri attributed the growth to "continued differentiated organic innovation" and market demand for the Netskope One platform across "security, networking, analytics, and AI." The company raised its fiscal 2027 revenue guidance to a range of $888 million to $892 million, with the midpoint coming in above the analyst forecast of $881 million.

AI is becoming an increasingly vital component of the company's strategy. Netskope, Inc. noted that its product lineup—including AI Guardrails, AI Gateway, AI Command Center, and Agentic Broker—is attracting growing customer interest, with some AI security opportunities already advancing to proof-of-concept stages. Beri highlighted during the earnings call that many enterprises still lack full visibility into which AI tools and intelligent agents are being used internally.

Management also emphasized that AI products will adopt a transaction-based pricing model, while certain security products will use outcome-based pricing. "Security and network modernization have become inseparable in the AI era," Beri stated.

Previously, CrowdStrike and Palo Alto Networks have reported robust growth figures, further confirming the resilience of enterprise cybersecurity demand—companies are deploying AI at an accelerated pace while still needing effective protection for increasingly complex digital infrastructures.