How to Invest in Netskope IPO: Buy Netskope Stock

Founded in 2012, Netskope is a software development company providing cybersecurity solutions for protecting cloud infrastructures against possible threats. The firm’s cloud security platform protects against hacking, data loss, and viruses amidst the world’s growing number of cyber threats.

The key pillar of Netskope’s security offering remains their indispensable contribution to “zero trust” network security. It mandates that nobody or no-thing is permitted to access company assets or data until they have been legitimized–the virtual equivalent of having professional boxers as bodyguards. 

Netskope currently serves:

• Over 30 of the Fortune 100
• 2 of the world’s 4 largest commercial banks
• 5 of the world’s 7 largest healthcare providers
• 2 of the world’s 3 largest telecommunications companies
• 2 of the world’s 4 largest retailers

Due to market conditions and Netskope’s strong balance sheet, a reasonable estimation is 2024. This estimation could change under the status of the S&P 500’s current levels.

After its July 2021 funding round, Netskope’s valuation stood at an impressive 7.5 billion USD, a 150% increase over its last funding round in February 2020. In January 2023, it also issued a convertible note for 400 million USD. This aligns with the rapidly expanding data protection as a service market, projected to reach 63 billion USD by 2027, reflecting a CAGR of 19.8% from 2021 to 2027. 

Further, Netskope’s reputation as a cybersecurity service provider has been solidified with an impressive line-up of investors: 

• ICONIQ
• Lightspeed Venture
• Accel
• Sequoia Capital
• Base Partners
• Sapphire Ventures
• Geodesic Capital

CEO Beri’s additional comments to TechCrunch provide insight hinting at a 2024 IPO date, which for Netskope seems to be turning into a major checkpoint year. 

In 2021, he mentioned that the company recently completed a “three-year journey building the largest cloud network that is 15 milliseconds from anyone in the world.” He intends to invest further funds into continual R&D and lead a global security market Netskope envisions to be worth 30 billion USD by 2024. Second, he referenced a “continued strong balance sheet.” Third, he closed with, “Going public is one day on our path, but you probably won’t see us raise another private round.”

It’s clear here that Beri wants to maximize the advantage of a private company: it can focus on R&D without the intense scrutiny of a wide investor base. 

Generally, investing in an IPO is riskier than investing in a stock already known to the public market, either through an American exchange like the NYSE or a European exchange like the LSE. 

However, there remain a few essential items to have on your analytical checklist no matter the stock or sector. 

1. Gross revenue (“top line”);
2. The revenue drivers, such as active user or member growth;
3. Profit margins, often EBITDA as a percentage of top line; EBITDA means “earnings before interest, tax, depreciation, and amortization;
4. Its private valuation growth, earned whenever a private capital raising with major investors, hedge funds, or banks occurs;
5. Cumulative funding and current (pre-IPO) investors;
6. The management team;
7. Its competitors.

If an “IPO Filing” has already occurred, a great place to start is taking the time to read through any stock’s original prospectus available on SEC. This helps cut through the noise and hype typically surrounding an IPO. Finding such information prior to an IPO filing remains difficult, yet reputable trade journals such as Forbes, WSJ, Crunchbase, or TechCrunch provide meaningful estimates. 

With respect to Netskope’s IPO, the below data is currently available, noting it is in USD:

1. Customer count: over 1,500 
2. Private valuation: 7.5 billion, a 150% year-over-year increase
3. Total cumulative funding: 1.4 billion
4. Management: Netskope’s CEO is Sanjay Beri, who previously held leadership positions with Juniper Networks, McAfee, and Ingrian Networks
5. Netskope has several competitors, including Cisco Umbrella, Zscaler, BetterCloud, and Okta; the latter already underwent an IPO at a valuation of 1.5 billion USD

And there you have a quick snapshot of Netskope. It’s important to remember that you want to see consistent growth over several years (at least three) without any breaks in momentum. 

In this scenario where a company reveals limited information, particularly concerning their income statement and balance sheet, it’s also vital to track their customer growth and investor base. If multiple independent trade journals or conferences also rate their products highly, the company could be a winner. 

However, a clear hesitation to reveal financials suggests an inordinate amount of spending, which almost always draws intense scrutiny. This data becomes available in an IPO filing. 

The Bottom Line

We’re excited about Netskope’s IPO. It has garnered an incredible valuation at 7.5 billion USD, doubling in more than a year, and leads in the cloud security startup space. 

It’s clear the company tapped into an expanding market. While the “smart money” follows Netskope, investors should never turn complacent. Any growth story needs consistency and solid financials.