Netskope reported second-quarter fiscal 2027 results that surpassed its guidance targets, with the cloud and AI security company posting revenue growth of 29% year over year to $220.5 million. Annual recurring revenue increased 27% to $899 million, while net new ARR reached $54 million, up 9% from the comparable period. The company saw regional revenue growth of 37% in EMEA, 31% in Asia-Pacific and Japan, and 25% in the Americas.
Netskope demonstrated expanding operational efficiency despite maintaining investments in growth. The adjusted operating margin reached negative 9%, an 11-percentage-point improvement year over year. Adjusted gross margin expanded to 77%, up approximately two percentage points annually. Net retention rate climbed to 114%, while gross retention reached an all-time high. The company ended the quarter with $1.1 billion in cash equivalents and marketable securities.
Demand for the company’s AI security products gained momentum, with roughly one-third of its AI security pipeline in or entering proof-of-concept stages. The company released several AI-focused offerings including Agentic Broker, AI Guardrails, AI Gateway and AI Command Center. Platform adoption broadened as 59% of customers utilized four or more Netskope One products, compared with 51% a year earlier, while 41% used five or more products, up from 35%. The number of customers generating over $100,000 in annual recurring revenue increased 23% to 1,686.
Netskope reduced approximately 5% of its workforce while reallocating spending toward AI infrastructure and research and development. The company raised its full-year revenue outlook to $888 million to $892 million, representing approximately 26% growth, and projects a positive free-cash-flow margin of about 2%. For the third quarter of fiscal 2027, the company forecast revenue of $227 million to $229 million, representing approximately 24% growth.
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