Netskope’s stock gains 18% following IPO that raised $908M – News

Netskope Inc.’s life as a publicly traded company got off to a great start today as its stock soared more than 18%, closing at $22.49 per share, down slightly from an intraday peak of $24.40.

Its impressive stock market debut followed an initial public offering that saw Netskope price its shares at $19, at the upper end of its quoted price range. It had initially announced an estimated price range of $15 to $17 per share, before bumping it up to $17 to $19 per share this week.

With 47.8 million shares made available to investors, the cybersecurity firm raised $908 million from the sale, which was underwritten by J.P. Morgan and Morgan Stanley.

Santa Clara-based Netskope is the developer of a secure access service edge or SASE platform that provides secure connections between enterprises and the data centers that power their applications and other technologies. Its flagship product is called Netskope One, and it also provides tools to help companies defend against cyberattacks.

Netskope One runs on bare metal servers deployed across more than 120 data centers worldwide, the company detailed in its IPO filing. Workers connect to Netskope’s infrastructure via a program called the NetSkope One Client that runs on their devices. It serves two functions: giving users access to business applications and detecting risky data use.

Administrators can use the management console to restrict which websites and applications can access, and they can also isolate an organization’s workloads at the network level, in order to make it difficult for malware to move between different systems. The platform features an artificial intelligence module known as the Zero Trust Engine, which analyzes network traffic to try and spot malicious activity and shut it down before it causes significant damage.

When it filed its IPO paperwork last month, the company revealed that it was generating annual recurring revenue of $707 million as of July 31, up 33% from a year earlier. It’s still unprofitable, though its losses are narrowing. In the first half of this year, it reported a net loss of $170 million, down from $207 million in the same period last year.

Its revenue is growing too. In the first six months of the year, it generated total sales of $328 million, up 31% from a year ago.

Iconiq Capital Partner Will Griffith, who was one of Netskope’s earliest backers, said the company excels at dealing with new cybersecurity threats posed by malicious AI algorithms. “Their decades of security and networking experience allowed them to recognize early signs that legacy approaches might no longer suffice, pointing to the need for a radically new approach built for scale, speed and continuous innovation,” he wrote in a blog post.

Netskope is led by its co-founder and Chief Executive Sanjay Beri, who previously served as a top-level executive at Juniper Networks Inc before leaving to found the company in 2012. Prior to that, he co-founded a startup called Ingrian Networks Inc. that specialized in data protection. That company was later acquired by SafeNet Inc.

The strong public debut shows that investors still have a huge appetite for new stock market offerings. The market for IPOs had been subdued ever since the coronavirus pandemic, but has rebounded strongly this year.

Prior to Netskope, the most recent IPO was the online ticket reseller StubHub Inc., though its stock declined 6% on the first day of trading. However, there have been much stronger debuts in recent weeks from companies such as Gemini Space Station Inc., Figure Technology Solutions Inc. and Firefly Aerospace Inc.

This year, the Renaissance IPO exchange traded fund, which is widely viewed as the best benchmark for IPOs, has gained 25%, outperforming the Nasdaq index, which is up 16% in the year to date.

Photo: Nasdaq