Netskope Inc. (NTSK) delivered a solid earnings surprise on Thursday, but investors weren't having it. The cloud security company posted quarterly losses of just 10 cents per share, crushing analyst expectations of 40-cent losses. Revenue came in at $184.2 million, comfortably ahead of the $175.9 million Wall Street was anticipating.
Looking ahead, Netskope projects fiscal 2025 adjusted losses between 51 to 53 cents per share, with revenue expected to land between $701 million and $703 million.
CEO Sanjay Beri was upbeat about the results and the company's positioning. "We delivered an excellent third quarter with accelerating top line growth and incremental improvements to the bottom line," he said. "Cloud modernization and AI are fueling strong demand for our market-leading Netskope One platform of security, networking, and analytics products. And, the investments we've made in our foundational technology architecture, NewEdge private cloud, and go-to-market engine are driving clear returns as we successfully scale to address our estimated $149 billion market opportunity."
Despite the beat and optimistic commentary, Netskope shares tumbled 11.4% to trade at $20.81 on Friday. The market's reaction highlights how even strong quarterly results can get overshadowed by concerns about future guidance or broader market sentiment.
Analysts, meanwhile, remained bullish following the earnings report, with several firms bumping up their price targets:
- Keybanc analyst Eric Heath maintained an Overweight rating and lifted his price target from $27 to $28.
- Mizuho analyst Gregg Moskowitz kept an Outperform rating while raising his target from $25 to $26.
- RBC Capital analyst Matthew Hedberg maintained an Outperform rating and increased his price target from $26 to $27.
The disconnect between analyst optimism and market reaction underscores the complexity of the current trading environment, where beating expectations isn't always enough to satisfy investors.
