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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-42848

Netskope, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	46-1141117
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2445 Augustine Drive, Suite 301 Santa Clara, California	95054
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (800) 979-6988

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class

     Trading
Symbol(s)

     Name of each exchange on which registered

     Class A Common Stock, $0.0001 par value

     NTSK

     The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of December 4, 2025, the registrant had outstanding 85,188,411 shares of Class A common stock, 308,070,450 shares of Class B common stock, and no shares of Class C common stock.

Table of Contents


		Page

PART I.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Statements of Changes in Stockholders' Equity (Deficit)	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	39

PART II.	OTHER INFORMATION	39

Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	89
Item 3.	Defaults Upon Senior Securities	90
Item 4.	Mine Safety Disclosures	90
Item 5.	Other Information	90
Item 6.	Exhibits	90
Signatures		92

Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future operating results and financial condition, our business strategy and plans, market growth, and our objectives for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” “aspire,” and similar expressions. These forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•

our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses, including changes in operating expenses, and our ability to achieve and maintain profitability;

•

our business plan and our ability to effectively manage our growth;

•

our total market opportunity;

•

anticipated trends, growth rates, and challenges in our business and in the markets in which we operate;

•

adoption of our platform;

•

beliefs and objectives for future operations;

•

our ability to attract new customers and successfully retain, and increase adoption of our platform and offerings by, existing customers;

•

our ability to develop and introduce new products and bring them to market in a timely manner;

•

our expectations concerning relationships with third parties;

•

our ability to maintain, protect, and enhance our intellectual property rights;

•

our ability to expand internationally;

•

the effects of increased competition in our markets and our ability to compete effectively;

•

our ability to identify, recruit, hire, and retain skilled personnel, including key members of senior management;

•

future acquisitions or investments in complementary companies, products, technologies, or services;

•

our ability to stay in compliance with laws and regulations that currently apply, or may become applicable to, our business both in the United States and internationally;

•

our ability to maintain the security and availability of our platform and protect against data breaches and other security incidents;

•

economic and industry trends, projected growth, or trend analysis;

•

general economic conditions in the United States and globally, including the effects of changes in tariffs or trade restrictions, global geopolitical conflicts, inflation, interest rates, any instability in the global banking sector, and foreign currency exchange rates;

•

our ability to operate and grow our business in light of macroeconomic uncertainty;

•

increased expenses associated with being a public company; and

•

other statements regarding our future operations, financial condition, and prospects and business strategies.

We caution you that the foregoing list may not contain all of the forward-looking statements contained in this Quarterly Report on Form 10-Q.

We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for us to predict all risks, uncertainties, and assumptions that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. In light of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report

Table of Contents

on Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements herein.

You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or to changes in our expectations, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. These forward-looking statements do not reflect the potential impact of any future acquisitions, restructurings, mergers, dispositions, joint ventures, partnerships, or investments we may make.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe such information provides a reasonable basis for these statements, such information may be limited or incomplete. Such statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Netskope, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(unaudited)


	October 31,			January 31,
	2025			2025
Assets
Current assets:
Cash and cash equivalents	$	984,652		$	166,012
Marketable securities		168,251			80,679
Accounts receivable, net		131,534			195,100
Inventories		5,377			5,763
Deferred contract acquisition costs		48,813			42,860
Prepaid expenses and other current assets		63,213			37,991
Total current assets		1,401,840			528,405
Property and equipment, net		89,544			99,480
Operating lease right-of-use assets		32,816			34,571
Intangible assets, net		23,895			37,242
Goodwill		61,083			61,083
Deferred contract acquisition costs, noncurrent		89,188			78,805
Other assets, noncurrent		16,670			18,920
Total assets	$	1,715,036		$	858,506
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	16,430		$	2,652
Accrued compensation and benefits		77,471			62,781
Deferred revenue		471,455			430,156
Operating lease liabilities, current		10,124			10,267
Accrued expenses and other current liabilities		27,505			20,852
Total current liabilities		602,985			526,708
Deferred revenue, noncurrent		148,426			160,151
Convertible notes		780,365			626,622
Operating lease liabilities, noncurrent		24,492			25,808
Other liabilities, noncurrent		7,737			4,806
Total liabilities		1,564,005			1,344,095
Commitments and contingencies (Note 7)
Stockholders’ equity (deficit):
Convertible preferred stock, $0.0001 par value: 300,000,000 shares authorized, no shares issued or outstanding as of October 31, 2025; 218,898,192 shares authorized, 218,897,608 shares issued and outstanding as of January 31, 2025		-			1,050,561
Common stock, $0.0001 par value: No shares authorized, issued, and outstanding as of October 31, 2025; 416,163,736 shares authorized, 104,589,784 shares issued and outstanding as of January 31, 2025		-			10
Class A common stock, $0.0001 par value; 3,000,000,000 shares authorized, 80,814,861 shares issued and outstanding as of October 31, 2025; no shares authorized, issued, and outstanding as of January 31, 2025		5			-
Class B common stock, $0.0001 par value; 600,000,000 shares authorized and 312,226,997 shares issued and outstanding as of October 31, 2025; No shares authorized, issued, and outstanding as of January 31, 2025		34			-
Class C common stock, $0.0001 par value; 1,000,000,000 shares authorized and no shares issued and outstanding as of October 31, 2025; No shares authorized, issued, and outstanding as of January 31, 2025		-			-
Additional paid-in capital		2,796,530			418,791
Accumulated other comprehensive loss		(73,408	)		(5,439	)
Accumulated deficit		(2,572,130	)		(1,949,512	)
Total stockholders’ equity (deficit)		151,031			(485,589	)
Total liabilities and stockholders’ equity (deficit)	$	1,715,036		$	858,506

The accompanying notes are an integral part of these condensed consolidated financial statements

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Netskope, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)


	Three Months Ended October 31,						Nine Months Ended October 31,
	2025			2024			2025			2024
Revenue	$	184,173		$	138,532		$	512,667		$	389,782
Cost of revenue		77,530			46,765			173,267			141,209
Gross profit		106,643			91,767			339,400			248,573
Operating expenses:
Sales and marketing		149,869			65,765			297,295			217,391
Research and development		262,702			62,402			403,439			192,758
General and administrative		141,042			17,434			176,959			52,989
Total operating expenses		553,613			145,601			877,693			463,138
Loss from operations		(446,970	)		(53,834	)		(538,293	)		(214,565	)
Other income (expense), net:
Loss on changes in fair value of convertible notes		(8,439	)		(18,125	)		(85,841	)		(63,249	)
Other income, net		5,407			711			9,529			3,469
Loss before provision for income taxes		(450,002	)		(71,248	)		(614,605	)		(274,345	)
Provision for (benefit from) income taxes		3,073			(505	)		8,013			3,127
Net loss	$	(453,075	)	$	(70,743	)	$	(622,618	)	$	(277,472	)
Net loss per share attributable to common stockholders, basic and diluted	$	(1.85	)	$	(0.72	)	$	(4.07	)	$	(2.89	)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted		244,659,095			98,265,450			153,012,468			95,875,697

The accompanying notes are an integral part of these condensed consolidated financial statements

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Netskope, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)


	Three Months Ended October 31,						Nine Months Ended October 31,
	2025			2024			2025			2024
Net loss	$	(453,075	)	$	(70,743	)	$	(622,618	)	$	(277,472	)
Other comprehensive (loss) income:
Unrealized (loss) gain on marketable securities, net of tax		(41	)		1			(67	)		(128	)
Unrealized (loss) gain on convertible notes, net of tax		(71,585	)		5,036			(67,902	)		8,801
Total other comprehensive (loss) income, net of tax		(71,626	)		5,037			(67,969	)		8,673
Total comprehensive loss	$	(524,701	)	$	(65,706	)	$	(690,587	)	$	(268,799	)

The accompanying notes are an integral part of these condensed consolidated financial statements

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Netskope, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit)

(in thousands, except share amounts)

(unaudited)


	Convertible Preferred Stock						Common Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares			Amount			Shares			Amount		Capital			Income (Loss)			Deficit			Equity (Deficit)
Balance as of January 31, 2025		218,897,608		$	1,050,561			104,589,784		$	10	$	418,791		$	(5,439	)	$	(1,949,512	)	$	(485,589	)
Issuance of common stock upon exercise of stock options		-			-			1,469,085			-		6,604			-			-			6,604
Vesting of employee early exercised common stock		-			-			-			-		355			-			-			355
Stock-based compensation		-			-			-			-		10,124			-			-			10,124
Other comprehensive income		-			-			-			-		-			21,253			-			21,253
Net loss		-			-			-			-		-			-			(79,242	)		(79,242	)
Balance as of April 30, 2025		218,897,608			1,050,561			106,058,869			10		435,874			15,814			(2,028,754	)		(526,495	)
Issuance of common stock upon exercise of stock options		-			-			3,257,610			1		14,652			-			-			14,653
Vesting of employee early exercised common stock		-			-			-			-		103			-			-			103
Stock-based compensation		-			-			-			-		7,557			-			-			7,557
Other comprehensive loss		-			-			-			-		-			(17,596	)		-			(17,596	)
Net loss		-			-			-			-		-			-			(90,301	)		(90,301	)
Balance as of July 31, 2025		218,897,608			1,050,561			109,316,479			11		458,186			(1,782	)		(2,119,055	)		(612,079	)
Conversion of convertible preferred stock to common stock upon initial public offering		(218,897,608	)		(1,050,561	)		218,897,608			22		1,050,539			-			-			-
Issuance of common stock upon initial public offering, net of underwriting discounts, commissions, and offering costs		-			-			54,970,000			5		985,740			-			-			985,745
Issuance of common stock upon exercise of stock options and vesting of restricted stock units		-			-			15,818,110			1		9,960			-			-			9,961
Net shares withheld to cover taxes upon vesting of restricted stock units		-			-			(5,960,339	)		-		(118,488	)		-			-			(118,488	)
Stock-based compensation		-			-			-			-		410,593			-			-			410,593
Other comprehensive loss		-			-			-			-		-			(71,626	)		-			(71,626	)
Net loss		-			-			-			-		-			-			(453,075	)		(453,075	)
Balance as of October 31, 2025		-		$	-			393,041,858		$	39	$	2,796,530		$	(73,408	)	$	(2,572,130	)	$	151,031

The accompanying notes are an integral part of these condensed consolidated financial statements

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Netskope, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit)

(in thousands, except share amounts)

(unaudited)


	Convertible Preferred Stock				Common Stock					Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Shares			Amount		Capital		Income (Loss)			Deficit			Deficit
Balance as of January 31, 2024		218,893,378	$	1,050,561		94,536,186		$	9	$	312,444	$	(24,832	)	$	(1,595,002	)		(256,820	)
Issuance of common stock upon exercise of stock options		-		-		720,549			-		3,109		-			-			3,109
Vesting of early exercised stock options		-		-		-			-		452		-			-			452
Stock-based compensation		-		-		-			-		14,266		-			-			14,266
Other comprehensive income		-		-		-			-		-		1,759			-			1,759
Net loss		-		-		-			-		-		-			(95,157	)		(95,157	)
Balance as of April 30, 2024		218,893,378		1,050,561		95,256,735			9		330,271		(23,073	)		(1,690,159	)		(332,391	)
Issuance of common stock upon exercise of stock options		-		-		2,425,952			1		10,469		-			-			10,470
Vesting of early exercised stock options		-		-		-			-		414		-			-			414
Stock-based compensation		-		-		-			-		13,117		-			-			13,117
Other comprehensive income		-		-		-			-		-		1,877			-			1,877
Net loss		-		-		-			-		-		-			(111,572	)		(111,572	)
Balance as of July 31, 2024		218,893,378		1,050,561		97,682,687			10		354,271		(21,196	)		(1,801,731	)		(418,085	)
Issuance of common stock upon exercise of stock options		-		-		2,218,589			-		9,797		-			-			9,797
Vesting of early exercised stock options		-		-		-			-		399		-			-			399
Issuance of common stock related to acquisitions		-		-		1,947,810			-		18,114		-			-			18,114
Repurchase of common stock		-		-		(1,376	)		-		-		-			-			-
Stock-based compensation		-		-		-			-		12,348		-			-			12,348
Other comprehensive income		-		-		-			-		-		5,037			-			5,037
Net loss		-		-		-			-		-		-			(70,743	)		(70,743	)
Balance as of October 31, 2024		218,893,378	$	1,050,561		101,847,710		$	10	$	394,929	$	(16,159	)	$	(1,872,474	)	$	(443,133	)

The accompanying notes are an integral part of these condensed consolidated financial statements

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Netskope, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Nine Months Ended October 31,
	2025			2024
Cash flows from operating activities
Net loss	$	(622,618	)	$	(277,472	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock-based compensation expense		428,114			39,653
Depreciation and amortization		35,791			39,861
Amortization of deferred contract acquisition costs		39,419			33,198
Non-cash operating lease expenses		10,032			8,886
(Accretion of discount) amortization of premium on investments, net		(552	)		(1,547	)
Change in fair value of convertible notes		85,841			63,249
Deferred income tax benefit		-			(2,254	)
Other		230			777
Changes in operating assets and liabilities:
Accounts receivable, net		63,566			(12,481	)
Inventories		149			29
Deferred contract acquisition costs		(55,755	)		(43,503	)
Prepaid expenses and other current assets		(20,164	)		927
Other non-current assets		2,251			(675	)
Accounts payable		13,359			4,746
Accrued compensation and benefits		8,121			4,969
Operating lease liabilities		(9,736	)		(9,515	)
Accrued expenses and other current liabilities		9,397			(4,467	)
Deferred revenue		29,574			37,753
Other non-current liabilities		2,931			1,068
Net cash provided by (used in) operating activities		19,950			(116,798	)
Cash flows from investing activities
Purchases of property and equipment		(9,563	)		(32,437	)
Capitalized internal-use software		(1,990	)		(2,579	)
Purchases of intangible assets		-			(3,337	)
Payments for business combination, net of cash acquired		-			(2,508	)
Purchases of marketable securities		(197,145	)		(40,636	)
Proceeds from maturities of marketable securities		63,601			120,514
Proceeds from sales of marketable securities		46,454			-
Net cash (used in) provided by investing activities		(98,643	)		39,017
Cash flows from financing activities
Proceeds from issuance of common stock upon initial public offering, net of underwriting discount and commissions		992,209			-
Payments for deferred offering costs		(6,320	)		-
Proceeds from issuance of common stock upon exercise of stock options		31,174			22,743
Proceeds from issuance of convertible senior notes, net of issuance cost		-			74,355
Payments for taxes upon net share settlement of equity awards		(117,205	)		-
Payments for holdback on business combination		(2,524	)		-
Net cash provided by financing activities		897,334			97,098
Net increase in cash, cash equivalents, and restricted cash		818,641			19,317
Cash, cash equivalents, and restricted cash, beginning of period		167,197			165,770
Cash, cash equivalents, and restricted cash, end of period	$	985,838		$	185,087
Supplemental disclosure of cash flow information:
Cash paid for amount included in the measurement of operating lease liabilities	$	12,082		$	11,466
Non-cash investing and financing activities:
Stock-based compensation capitalized in internal-use software	$	160		$	78
Property and equipment purchased but not yet paid	$	1,258		$	1,550
Vesting of early exercised stock options	$	458		$	1,264
Issuance of common stocks in connection with acquisitions	$	-		$	17,857
Conversion of preferred stock into common stock	$	1,050,561		$	-
Amount of shares withheld to cover taxes upon settlement of equity awards, but not yet paid	$	6,569		$	-

The accompanying notes are an integral part of these condensed consolidated financial statements

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Netskope, Inc.

Notes to condensed consolidated Financial Statements

(unaudited)

Note 1 - Description of Business

Netskope, Inc. ("Netskope" or the "Company") is a global cybersecurity company that provides security, networking, and analytics solutions to organizations ranging from some of the world's largest enterprises to mid-sized companies. The Company delivers its offerings through a Software-as-a-Service ("SaaS") business model, selling subscriptions that provide customers access to its platform along with related support services.

The Company was incorporated in Delaware in October 2012. The Company is headquartered in Santa Clara, California, and conducts business worldwide, including North America, South America, Europe, and Asia.

Initial Public Offering

In September 2025, the Company completed its initial public offering ("IPO") in which it issued and sold 54,970,000 shares of Class A common stock at the public offering price of $19.00 per share. The Company received net proceeds of approximately $992.2 million after deducting underwriting discounts and commissions of $52.2 million. In addition, the Company incurred offering costs totaling $6.5 million, which consisted mainly of direct incremental legal, accounting, and other fees related to the IPO. Prior to the IPO, the offering costs were initially recognized within prepaid expenses and other current assets in the condensed consolidated balance sheets. Upon the consummation of the IPO, the offering costs were reclassified into stockholders' equity (deficit).

In connection with the closing of the IPO, all shares of the Company's outstanding convertible preferred stock were automatically converted into a total of 218,897,608 shares of Class B common stock.

Prior to the IPO, the Company granted certain stock options and restricted stock units ("RSUs") that had both service and performance vesting conditions. The performance condition pertained to the satisfaction of a liquidity event such as the consummation of an IPO. The Company was not required to recognize stock-based compensation expense for those stock options and RSUs prior to the IPO. Upon the satisfaction of the performance condition, which was the consummation of the IPO, the Company recognized stock-based compensation expense for those stock options and RSUs that had already met or partially met the service vesting condition. In connection with the vesting of the RSUs at the time of the IPO, the Company net settled the shares of common stock issued to the employees by withholding a total of 4,549,237 shares in order to satisfy the requirement to withhold and remit the employees' taxes associated with the vesting of the RSUs to the relevant tax authorities.

Note 2 - Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), and applicable rules and regulations of the Securities and Exchange ("SEC"), regarding interim financial reporting. Accordingly, they do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company's final prospectus dated September 17, 2025 and filed with the SEC pursuant Rule 424(b)(4) on September 18, 2025 ("Final Prospectus").

In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, including those of a normal and recurring nature, which are necessary for a fair presentation of the results for the interim period presented. The results of operations for interim periods are not necessarily indicative of results for the full year. The unaudited condensed consolidated financial statements include the accounts of the Company's wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company's fiscal year ends on January 31.

Emerging Growth Company Status

The Company is an emerging growth company ("EGC") as defined in the Jumpstart Our Business Startups Act of 2012 ("JOBS Act"). An EGC may take advantage of specified reduced reporting requirements that are otherwise applicable generally to public companies, including, but not limited to, delayed adoption of new or revised accounting pronouncements applicable to public

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companies until such pronouncements are made applicable to private companies, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

The Company may take advantage of these exemptions until it is no longer an EGC. The Company will cease to be an EGC upon the earliest to occur of: (i) the first fiscal year following the fifth anniversary of its initial public offering; (ii) the first fiscal year after annual gross revenue is $1.235 billion or more; (iii) the date on which the Company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the date on which the Company qualifies as a "large accelerated filer," as defined in Rule 12b-2 under the Exchange Act, which would occur at the end of any fiscal year in which the market value of the Company’s common stock held by non-affiliates exceeded $700.0 million as of the end of the second quarter of that fiscal year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed financial statements and accompanying notes. Such estimates include, but are not limited to, the estimation of fair value of Convertible Notes (as defined below), the determination of fair value of the Company's common stock prior to the completion of the IPO, stock-based awards, standalone selling price ("SSP") for each performance obligation, useful lives of intangible assets and property and equipment, the period of benefit for deferred contract acquisition costs for commissions, incremental borrowing rate used to value operating lease liabilities, income taxes including related reserves, and valuation of intangible assets and goodwill. These estimates are based on information available as of the date of the condensed consolidated financial statements. On a regular basis, management evaluates these estimates and assumptions. Actual results may differ from these estimates and such difference could be material to the condensed consolidated financial statements.

Concentration of Risk

Concentration of Credit Risk

Financial instruments that are exposed to the concentration of credit risk consist primarily of cash, cash equivalents, restricted cash, marketable securities, and accounts receivable. Although the Company maintains cash and cash equivalents in multiple financial institutions, the deposits, at times, may exceed federally insured limits. The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash, cash equivalents, restricted cash, and marketable securities for the amounts reflected on the condensed consolidated balance sheets. The Company's investment policy limits investments to certain types of debt securities issued by the U.S. government, its agencies, and institutions with investment-grade credit ratings and places restrictions on maturities and concentration by type and issuer. The Company has not experienced any credit losses relating to its cash, cash equivalents, restricted cash, or marketable securities.

Concentration of Revenue and Accounts Receivable

The Company's revenue and accounts receivable are derived substantially from the United States, Europe, and Asia and from customers across a multitude of industries. The Company grants credit to customers in the normal course of business. The Company maintains an allowance for credit losses for estimated losses resulting from the inability of its customers to make payments. The Company conducts on-going credit evaluations of customers' payment history and current creditworthiness. The allowance is maintained for all accounts deemed to be uncollectible on a specific identification basis. The allowance for credit losses were immaterial as of October 31, 2025 and January 31, 2025.

As of October 31, 2025, there were two channel partners that represented approximately 16% and 15% of the accounts receivable, net balance. As of January 31, 2025, there was one channel partner that represented approximately 17% of the accounts receivable, net balance.

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No single end customer represented 10% or more of total revenue for the three and nine months ended October 31, 2025 and 2024. Channel partners that represented 10% or more of total revenue for the three and nine months ended October 31, 2025 and 2024 were as follows:


	Three Months Ended October 31,				Nine Months Ended October 31,
	2025			2024	2025			2024
Channel Partner A		14	%	12%		13	%	12%

Vendor Risk

The Company uses third party vendors for delivering the Company's SaaS platform. While these services are highly available and designed to be resilient to failure of infrastructure, the Company's services could be significantly impacted if the third party vendors' services experience certain types of interruptions.

Cash, Cash Equivalents, and Restricted Cash

Restricted cash consisted of balances held as collateral in connection with certain facility lease agreements. The Company had restricted cash of $1.2 million as of October 31, 2025 and January 31, 2025, which is included within other assets, noncurrent in the condensed consolidated balance sheets.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash to the total of these amounts shown in the condensed consolidated statements of cash flow (in thousands):


	October 31,		January 31,
	2025		2025
Cash and cash equivalents	$	984,652	$	166,012
Restricted cash		1,186		1,185
Total cash, cash equivalents, and restricted cash	$	985,838	$	167,197

Operating Leases

Supplemental cash flow information related to the Company's operating leases for nine months ended October 31, 2025 and 2024 were as follows (amount in thousands):


	Nine Months Ended October 31,
	2025		2024
Supplemental Cash Flow Information
Operating lease ROU assets obtained in exchange for operating lease liabilities	$	8,262	$	8,726

Convertible Notes

The Company accounts for its 3.75% Convertible Senior Paid in Kind ("PIK") Toggle Notes due in December 2028 (the “2028 Notes”) and 3.00% Convertible Senior PIK Toggle Notes due in 2029 (the “2029 Notes”, collectively referred to as the "Convertible Notes"), at fair value under the fair value option in accordance with Accounting Standards Codification ("ASC") 825, Financial Instruments. The Convertible Notes are remeasured at fair value each reporting period, with changes in fair value recognized in the condensed consolidated statements of operations and condensed consolidated statements of comprehensive loss. Changes in fair value attributable to instrument-specific credit risk are recorded in other comprehensive income (loss) within stockholders' equity (deficit).

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On September 23, 2025, in connection with the Company's IPO, the Company provided notice to noteholders that the IPO qualified as Qualified Initial Public Offering ("Qualified IPO") as defined in respective indenture. As a result, the conversion rate for the 2028 Notes is 42.1046 shares of Class B common stock per $1,000 principal amount (corresponding conversion price is $23.7504), and for the 2029 Notes is 40.4858 shares of Class B common stock per $1,000 principal amount (corresponding conversion price is $24.7000). The Convertible Notes remain subjected to fair value measurement subsequent to the IPO.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (" FASB") issued Accounting Standards Update ("ASU") No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires qualitative disclosure about specific categories of reconciling items and individual jurisdictions that result in a significant difference between the statutory tax rate and the effective tax rate, as well as additional information on income taxes paid. This ASU is effective for the Company beginning February 1, 2026. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Topic 220): Disaggregation of Income Statement Expenses, which requires disclosure of additional information about specific expense categories underlying certain income statement expense line items. Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. This ASU is effective for the Company beginning February 1, 2027 and requires either prospective or retrospective application. The Company is currently evaluating the impact of this ASU on its disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU introduces a practical expedient for the application of the current expected credit loss model to current accounts receivable and contract assets. The ASU is effective for the Company beginning February 1, 2026, and requires to be adopted on a prospective basis, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.

Note 3 - Fair Value Measurements

The Company classifies its cash equivalents and marketable securities within Level 1 or Level 2 because they are valued using either quoted market prices or inputs other than quoted prices which are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security which may not be actively traded.

The Company classifies its Convertible Notes within Level 3 and they are measured at fair value using valuation techniques and require significant management judgment or estimation.

Cash Equivalents and Marketable Securities

The following tables summarize cash equivalents and marketable securities within significant investment categories by level of input within the fair value hierarchy as of October 31, 2025 and January 31, 2025 (in thousands):


	October 31, 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Cash Equivalents		Marketable Securities
Level 1
Money market funds	$	857,986	$	-	$	-		$	857,986	$	855,382	$	2,604
Level 2
Commercial paper		20,349		6		(3	)		20,352		6,969		13,383
Corporate debt securities		89,483		59		(83	)		89,459		-		89,459
Asset-backed securities		62,853		21		(69	)		62,805		-		62,805
Total	$	1,030,671	$	86	$	(155	)	$	1,030,602	$	862,351	$	168,251

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	January 31, 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Cash Equivalents		Marketable Securities
Level 1
Money market funds	$	26,262	$	-	$	-		$	26,262	$	24,369	$	1,903
Level 2
Commercial paper		56,611		10		(3	)		56,618		24,996		31,622
Corporate debt securities		26,940		27		(56	)		26,911		-		26,911
Asset-backed securities		20,344		30		(131	)		20,243		-		20,243
Total	$	130,157	$	67	$	(190	)	$	130,034	$	49,365	$	80,679

Valuation Methodology

The Convertible Notes are measured at fair value and are categorized within Level 3 of the fair value hierarchy. Prior to the completion of IPO, the fair value of the Convertible Notes was estimated using scenario-based binomial lattice model. The scenarios consist of (a) Scenario 1 - likelihood of achieving a liquidity event, such as an IPO, and (b) Scenario 2 - the Company will remain private. Following the IPO, the fair value of the Convertible Notes is estimated using a single-scenario lattice approach that incorporates the trading price of the Company's Class A common stock data, risk-free interest rate, and estimated credit spread.

The fair value of the Convertible Notes on their respective issuance dates was the same as the carrying amounts of $401.0 million for the 2028 Notes and $75.0 million for the 2029 Notes.

The following tables summarize the significant quantitative inputs considered in the valuation of Convertible Notes as of October 31, 2025 and January 31, 2025:


	October 31, 2025						January 31, 2025
Inputs	2028 Notes			2029 Notes			2028 Notes			2029 Notes
Price per share	$	23.64		$	23.64		$	12.41		$	12.41
Conversion premium		30.0	%		30.0	%		30.0	%		30.0	%
Risk-free rate		3.6	%		3.6	%		4.3	%		4.3	%
Selected credit spread		9.0	%		9.0	%		13.8	%		13.8	%
Coupon rate		3.8	%		3.0	%		3.8	%		3.0	%
Expected volatility		40.0	%		40.0	%		65.0	%		65.0	%
Time until exit (in years)		-			-			0.7			0.7

The Company did not have transfers between levels of the fair value hierarchy of assets measured at fair value during the periods presented.

Note 4 - Revenue Recognition

Disaggregation of Revenue

Subscription revenue is recognized over time and accounted for 99% of the Company's total revenue for the three and nine months ended October 31, 2025 and 2024, respectively.

The following table summarizes the disaggregation of revenue by geographic area, based on the shipping address of the end customer for contracts through channel partners and direct customers (in thousands):


	Three Months Ended October 31,				Nine Months Ended October 31,
	2025		2024		2025		2024
Americas	$	104,480	$	78,013	$	289,340	$	222,852
Asia Pacific and Japan ("APJ")		33,988		26,436		95,613		72,838
Europe, the Middle East, and Africa ("EMEA")		45,705		34,083		127,714		94,092
Total revenue	$	184,173	$	138,532	$	512,667	$	389,782

Table of Contents

Revenue from the United States, which is included within the Americas region in the table above, was $82.8 million, $63.7 million, $229.5 million, and $183.1 million during the three months ended October 31, 2025 and 2024, and the nine months ended October 31, 2025 and 2024, respectively.

The following table summarizes revenue from contracts through indirect channels, including channel partners and managed service providers ("MSPs"), and direct end customers for the periods presented (in thousands):


	Three Months Ended October 31,				Nine Months Ended October 31,
	2025		2024		2025		2024
Indirect channels	$	175,232	$	129,532	$	486,805	$	362,795
Direct end customers		8,941		9,000		25,862		26,987
Total revenue	$	184,173	$	138,532	$	512,667	$	389,782

Deferred Revenue

Deferred revenue consists primarily of payments received and accounts receivable recorded in advance of performance under the contract. Such amounts are recognized as revenue over the contractual period. The amount of revenue recognized during the three months ended October 31, 2025 and 2024 and the nine months ended October 31, 2025 and 2024, that was included in the deferred revenue at the beginning of the period, were $96.2 million, $75.3 million, $368.4 million, and $286.2 million, respectively.

Payments are received from customers based upon contractual billing schedules and accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets include amounts related to the Company's contractual right to consideration for both completed and partially completed performance obligations that may not have been invoiced and such amounts have historically not been material.

The following table summarizes the activity of deferred revenue (in thousands):


	October 31,			January 31,
	2025			2025
Beginning balance	$	590,307		$	436,931
Additions		542,242			691,644
Recognition of deferred revenue		(512,668	)		(538,268	)
Ending balance	$	619,881		$	590,307

Deferred revenue, current	$	471,455		$	430,156
Deferred revenue, noncurrent		148,426			160,151
Total deferred revenue	$	619,881		$	590,307

Remaining Performance Obligations

Remaining performance obligations represents the amount of contracted future revenue that has not yet been recognized, including both deferred revenue that has been invoiced and non-cancelable committed amounts that will be invoiced and recognized as revenue in future periods.

As of October 31, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was $1.1 billion. The Company expects to recognize 56% of the remaining performance obligations over the next 12 months and 41% between 13 and 36 months, with the remainder to be recognized thereafter.

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Deferred Contract Acquisition Costs

The following table summarizes the activity of deferred contract acquisition costs (in thousands):


	October 31,			January 31,
	2025			2025
Beginning balance	$	121,665		$	100,747
Capitalization of contract acquisition costs		55,755			66,183
Amortization of deferred contract acquisition costs		(39,419	)		(45,265	)
Ending balance	$	138,001		$	121,665

Netskope Inc 10-Q