Netskope (NTSK) Up 16.8% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Netskope (NTSK). Shares have added about 16.8% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Netskope due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.Key Highlights•    Revenue: $201.6 million in Q1 fiscal 2027, up 28% year over year.•    Non-GAAP EPS reported at a loss of 6 cents, improved from a loss of 28 cents per share in Q1 fiscal 2026.•    ARR: $845 million, up 29% year over year.•    Remaining performance obligations: over $1.2 billion, up 33% year over year; contracted future billings grew 71%.•    Customers with more than $100,000 in ARR: 1,600, up 23% year over year.Growth Drivers and Top-Line PerformanceRevenue rose 28% in Q1 fiscal 2027 to $201.6 million, ahead of guidance, supported by demand across regions. Management noted a strong new-logo engine, with ARR from new customers up roughly 60% year over year. Net new ARR of $34 million compared with $39 million in first-quarter fiscal 2026, reflecting a difficult prior-year upsell comparison that included several outsized expansions. Net retention was 113%, and gross retention reached a company high, underscoring healthy customer satisfaction and continued platform expansion.AI Security Momentum and Go-to-Market ExecutionThe company reported the fastest pipeline build in its history for a new product category with its AI Security suite and noted early conversions. New launches included AI Command Center, AgentSkope AI agents, AI Gateway, AI Guardrails, Agentic Broker and Red Teaming. Roughly half of sales reps are new or still ramping, which is expected to support a back-half acceleration in net new ARR. The expanded Deloitte alliance aims to strengthen pipeline and implementation capacity. Indirect channels remain primary, with $194.9 million of fiscal first-quarter revenues via partners versus $6.7 million direct.Profitability and Operating TrendsNon-GAAP gross margin reached 77%, aided by NewEdge scale. Non-GAAP operating margin improved to (14)% from (18)% a year ago, reflecting some operating leverage despite ongoing investment in R&D and field capacity. GAAP cost of revenue rose 11% year over year, with higher network and colocation expenses partly offset by lower intangible amortization; IPO-related stock-based compensation also affected cost lines.Customer Metrics and Platform AdoptionEnterprise adoption broadened: customers with >$100k ARR rose 23% to 1,600, 57% use four or more products (vs. 49% a year earlier), and 28% use six or more (vs. 23% a year earlier). These trends, together with 113% NRR, support the cross-sell narrative across the more-than-25-product portfolio.Balance sheet and cash flowFirst-quarter fiscal 2027 operating cash flow was negative $53.9 million versus $25.6 million in first-quarter fiscal 2026. Negative free cash flow was $57.2 million with a negative 28% margin, compared with $17.5 million and 11% a year ago. Management characterized fiscal first-quarter free cash flow as the low watermark of the transition to annual billings, which shifts collections later and increases visibility into future cash flows. Cash, cash equivalents, and marketable securities totaled about $1.1 billion. Deferred revenues were $652.8 million, and remaining performance obligations exceeded $1.2 billion, with 54% expected to be recognized in the next 12 months.Guidance and Management CommentaryFor second-quarter fiscal 2027, revenues are guided in the range of $213-$215 million (about 25%-26% growth), with non-GAAP negative operating margin of 14% to 15% and non-GAAP EPS at a loss of 6 cents to 7 cents on roughly 410 million shares.For fiscal 2027, revenues are expected in the band of $879-$883 million (about 24%-25% growth), with non-GAAP gross margin of 77%, non-GAAP negative operating margin of 9.5% to 10%, non-GAAP loss of 18 cents on 415 million shares, and free cash flow margin of 2-4%. Management expects ARR growth to be within about one point of revenue growth and continues to call for a second-half acceleration as newer reps mature and AI Security ramps.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in estimates review.The consensus estimate has shifted -266.67% due to these changes.VGM ScoresAt this time, Netskope has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock has a grade of F on the value side, putting it in the fifth quintile for value investors.Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Interestingly, Netskope has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.Performance of an Industry PlayerNetskope belongs to the Zacks Internet - Software industry. Another stock from the same industry, Box (BOX), has gained 4.2% over the past month. More than a month has passed since the company reported results for the quarter ended April 2026.Box reported revenues of $305.94 million in the last reported quarter, representing a year-over-year change of +10.7%. EPS of $0.37 for the same period compares with $0.30 a year ago.Box is expected to post earnings of $0.40 per share for the current quarter, representing a year-over-year change of +21.2%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Box. Also, the stock has a VGM Score of B.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.See Stocks Now >>This article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks