Shares of leading cloud cybersecurity upstart Netskope (NTSK +0.67%) are down 12% as of noon ET on Friday after the stock delivered its first-ever earnings report on Thursday.
The company surpassed Wall Street's expectations for the third quarter, growing sales by 33% and remaining performance obligations by 41%. However, with the stock priced for perfection at 14 times sales before today's drop, the market sent Netskope's shares downward after its guidance underwhelmed.
From a Foolish perspective, I don't think there was anything wrong with Netskope's earnings, and the company's future looks promising.
NASDAQ: NTSK
Key Data Points
Netskope: Combining security, networking, and analytics in an AI world
Netskope was formed in 2012 and is founder-led by Sanjay Beri. It recently went public in September of this year and is vying to carve out its own niche in the essential cybersecurity industry.
Despite its somewhat nascent operations, Netskope was named a:
- leader in Gartner's Magic Quadrant for SASE (Secure Access Service Edge) Platforms for the last two years
- leader in the Magic Quadrant for SSE (Security Service Edge) for the last four years
- leader in Forrester's Wave SASE solutions
- major player in International Data Corporation's MarketScape for Worldwide DLP (Data Loss Prevention) Vendor Assessment
These leadership rankings place Netskope inline with some heavy hitters, such as Fortinet, Palo Alto Networks, and Zscaler, despite being a new entrant to a market worth roughly $150 billion.
Image source: Getty Images.
As an increasingly popular cybersecurity solution among data-heavy, enterprise customers, Netskope now counts more than 30 Fortune 100 companies as customers.
Best yet, not only is Netskope adding new enterprise customers as it dives deeper into an AI-powered world (which the company helps protect), but it has also grown its net retention rate from 113% to 118% over the last year.
This highlights the company's strong ability to upsell and cross-sell more products to its existing customer base.
While I'm intrigued by Netskope's growth potential, I prefer to give new IPO's a few quarters' worth of time to see what their financials and stock-based compensation look like.
