Netskope: Security for the Cloud and AI Era

Introduction

This idea came from active subscribers of the FJ Research Community. I am thankful for this interesting stock suggestion that emerged from within the community and I am happy to deliver this report for all of us.

Every new technology cycle creates both opportunity and risk. The cloud era created massive productivity gains but also destroyed the concept of a secure perimeter. Enterprises that once built fortress-like defenses around their networks suddenly faced a new reality. Users were everywhere. Applications were in the cloud. Data was moving in and out at scale. The traditional security stack broke.

Netskope was born in 2012 to solve exactly that problem. For more than a decade, the company remained private, raising billions from top-tier investors, building a broad product suite, and scaling a customer base that included some of the largest enterprises in the world. In September 2025, Netskope finally stepped into the public markets under the ticker NTSK.

The IPO marks the beginning of a new chapter. Investors now get the chance to own a piece of one of the most ambitious security companies of this generation. But the question for me is simple. Does Netskope fit into my highly concentrated, conviction-driven portfolio where every bet must have the potential to change lives

Founding Story

The founding team saw something that others ignored. They realized that the perimeter was gone. Users were logging in from anywhere, applications were no longer hosted on company servers, and the rise of SaaS meant data was flowing in unpredictable patterns. The founders believed that the only way to secure this new reality was to build a platform designed for the cloud itself.

From the beginning, Netskope took a platform-first approach. Rather than launch one small product and later bolt on more, they built with the conviction that enterprises would need a unified security fabric that covered all user activity, all data, and all applications.

The company was co-founded by Sanjay Beri, who continues to lead as CEO. This continuity matters. Founders who stay in the game for more than a decade, through funding cycles, scaling pains, and the discipline of an IPO roadshow, bring stability and alignment.

Leadership and Culture

Leadership at Netskope comes directly from the top. Sanjay Beri has consistently articulated the vision of security designed for the cloud and now for the AI era. The team he has assembled brings experience from leading cybersecurity and enterprise software companies.

Culture in a security company is not a soft topic. If the culture is weak, the product will be weak. Netskope has positioned itself as engineering-driven, customer obsessed, and ambitious. Their decision to invest in their own backbone network, called NewEdge, is a signal of this culture. It is a high-cost, high-conviction bet that only makes sense if you believe in your mission with absolute clarity.

The challenge for Netskope will be scale. As headcount rises and as they transition from startup to large public company, can they keep the same urgency, the same founder-led spirit, and the same bias toward bold product moves That is what I will be watching.

Industry Landscape

Cybersecurity is not new. But every wave of computing reshapes it. The perimeter era created companies like Check Point and Cisco. The endpoint era helped CrowdStrike. The identity era helped Okta. The cloud era created Zscaler. The AI era will create the next generation of winners.

Netskope sits at the intersection of cloud, SaaS, web, and AI workloads. The industry term for what they do is Security Service Edge, or SSE, which is a core component of Secure Access Service Edge, or SASE. That alphabet soup simply means consolidating multiple security functions into a single cloud-native service.

The trend is clear. Enterprises do not want twenty vendors. They want one platform that is reliable, scalable, and integrated. Netskope is competing to be that platform.

The total addressable market is measured in tens of billions. Cloud security alone is projected to be one of the fastest growing segments in enterprise IT. Add to that the emerging need for AI workload protection, and the market only gets bigger.

Product and Competitive Advantage

Netskope offers a suite of products under one roof. Key components include

• Cloud Access Security Broker (CASB)

• Secure Web Gateway (SWG)

• Zero Trust Network Access (ZTNA)

• Data Loss Prevention (DLP)

• Threat protection modules

• API security and visibility tools

What makes Netskope different is the combination of breadth and infrastructure.

First, breadth. They are not a point solution. The modules connect through a shared data and analytics layer. This reduces friction for customers, increases stickiness, and positions Netskope as a long-term partner rather than just another vendor.

Second, infrastructure. Netskope invested in building its own global private network called NewEdge. This reduces latency for end users and improves the effectiveness of security policies. It is expensive to build and maintain, but if successful it becomes a moat. Competitors that rely on third-party networks cannot easily replicate the same performance and integration.

Third, intelligence. Netskope has invested heavily in analytics, machine learning, and threat research. As AI-driven attacks become more common, these capabilities will be critical. Security is an arms race. Companies that accumulate the most data and feed it into their models will win.

Competitive Landscape

Competition is fierce. The main names are

• Zscaler, the most direct comparable, already public with strong revenue growth

• Palo Alto Networks, the incumbent giant that has adapted aggressively to the cloud era

• Cisco, Fortinet, and Check Point, legacy players layering on cloud products

• CrowdStrike, Okta, and Cloudflare, overlapping in identity, endpoint, or network security

• A wave of smaller startups targeting AI and cloud security niches

Netskope has advantages, but also faces challenges. The incumbents can discount and bundle. The startups can move faster in niches. The cloud providers themselves, like AWS and Microsoft, can build native security modules.

The bet on Netskope is that the unified platform plus infrastructure plus intelligence combination will be strong enough to carve out a durable leadership position.

Investors and Financial Backers

Before going public, Netskope raised billions in venture and growth capital. The backers included many of the most respected names in technology investing. This provided both capital and credibility.

These investors were patient, waiting more than a decade for an IPO. That long gestation period usually signals a company that took the time to mature rather than rush to the public markets.

IPO and Financials

Netskope priced its IPO at 19 dollars per share, raising over 900 million dollars. In early trading, the market pushed the valuation higher, reflecting strong investor appetite for a new cybersecurity story.

The company reports thousands of customers, including over 30 percent of the Fortune 100. That is not trivial. Large enterprises are sticky, slow to change vendors, and provide long-term recurring revenue.

The subscription revenue base is expanding rapidly. The challenge now is to prove that margins can expand, operating leverage can kick in, and free cash flow can become positive. This is what the market will demand quarter after quarter.

We do not yet have multiple years of public data, but key metrics to watch will be gross margin, operating margin trajectory, net revenue retention, and customer expansion rates.

Risks

No asymmetric opportunity comes without risk. For Netskope, the main risks are

• Profitability may be far away if infrastructure costs balloon

• Competition from both incumbents and hyperscale cloud providers is intense

• Switching costs may not be high enough if customers run hybrid stacks

• A major breach of their own systems would be devastating for reputation

• Valuation could be ahead of fundamentals, leading to volatility in early quarters

Fit with My Ultra Concentrated Portfolio

Here is the central question. Does Netskope deserve a place in my concentrated portfolio where each position must have the potential to create life changing returns

The positives. Netskope plays in one of the largest secular trends of our time. It has founder continuity, enterprise traction, and a platform vision. It has built some structural advantages, particularly with NewEdge. The IPO gives it fresh capital to scale further.

The negatives. The business is not yet proven in public markets. Margins and cash flow are uncertain. Competition is relentless. Valuation may already reflect high expectations.

My assessment is that Netskope is a stock worth watching closely and possibly taking a small starter position. It should not yet be a core holding in a concentrated portfolio. If execution is strong over the next two to three quarters, if revenue growth remains high, if margins expand, and if enterprise adoption deepens, then Netskope could graduate into a more meaningful position.

That is the way I would approach it. Start small. Watch closely. Scale conviction only if the numbers and execution back the story.

What to Watch

For the next few quarters, the key metrics are

• Revenue growth relative to guidance

• Gross margin expansion

• Operating leverage and EBITDA trajectory

• Net revenue retention and expansion within Fortune 100 accounts

• Global performance of the NewEdge network

• Cash flow progression

If these metrics trend in the right direction, Netskope could become one of the defining security companies of the AI and cloud era.

Conclusion

Netskope represents ambition, vision, and a bet on the future of security. It is not yet a proven compounder, but it has the ingredients to become one. For my portfolio, every position must have the potential to multiply in value, not just deliver incremental returns. Netskope could one day fit that definition, but it must prove itself in the public arena first.

The opportunity is real. The risks are equally real. The next twelve months will tell us whether Netskope is simply another IPO story or a true category defining platform.