• Netskope is one of the leading players in the SASE (secure access service edge) market
• Its services are sold via partners, including telcos such as Orange, SoftBank Corp, Telefónica and Telstra 
• After raising more than $1.4bn in funding, the company has finally filed for an IPO that could value it at more than $5bn

After multiple funding rounds and plenty of industry speculation about potential investor exit plans, Netskope, one of the leading players in the SASE (secure access service edge) market, has filed for an initial public offering (IPO) on the Nasdaq exchange that could value the company at more than $5bn.

The company’s filing with the Securities and Exchange Commission (SEC) reveals how fast it is growing, how it is not yet profitable, and the size of its business opportunity. The filing doesn’t say how much the company is hoping to raise from the IPO or what the price of its shares would be, but Reuters reports it is expected to raise more than $500m at a valuation of more than $5bn. Netskope has raised about $1.44bn from multiple funding rounds, the latest of which was in early 2023 when it raised $401m from “four of the world’s premier investors” – namely Morgan Stanley, Goldman Sachs, Ontario Teachers’ Pension Plan, and CPP Investments.    

But before we look further at the company’s financials and growth, here’s a reminder of what Netskope, which was founded in 2012 and evolved as the enterprise networking sector embraced (and converged) software-defined networking (SDN) and cybersecurity, has to offer the global business-to-business (B2B) services sector.  

The company is at the heart of one of the key areas of the global networking services sector – the intersection of connectivity, cloud, security, data management and AI. 

It aims to support the needs of enterprises with a converged networking, security and analytics platform called Netskope One. That is supported by the company’s suite of proprietary AI applications, SkopeAI, and the company’s NewEdge network, which it claims is “one of the world’s largest and most connected global private security cloud networks, which is specifically designed to deliver highly secure and performant digital interactions.” The NewEdge network comprises bare metal servers running the Netskope stack that are located in more than 120 datacentres spread across more than 75 markets.

Key to the company’s proposition is its focus on enabling secure, context-driven data interactions. It notes that the modern cloud and AI digital landscape “is dynamic, data-rich and interactive, spanning the web, datacentres, managed and unmanaged SaaS [software-as-a-service] applications, private and public clouds, and ecosystem applications. Today’s internet and software applications use modern languages and methods of exchanging information, rich context and data, notably via application programming interfaces (APIs) and new protocols, such as Model Context Protocol (MCP) and the Agent2Agent (A2A) protocol typically encoded using JavaScript Object Notation (JSON). Applications now connect directly to AI models via APIs and various protocols – sending requests, initiating third-party services and receiving responses in real-time – all of which increase the complexity of these interactions and some of which require little or no human interaction. The challenge is security – organisations must have very granular visibility and context of the modern digital landscape so they can enable its use but must also do so securely and with a great end user experience. This requires a real-time, deep understanding of the contextual parameters of each digital interaction to enable more granular levels of dynamic and comprehensive control – a necessity for organisations modernising their security while prioritising business adoption of new technologies.”

And it believes it has the platform that can help enterprises operate safely in this fast-changing environment. “Our patented technologies and our zero-trust engine were built from the ground up to operate at this layer, enabling us to inspect, analyse, and control traffic in real time and at high speed. We leverage this profound contextual intelligence to understand and control more than 100 different activity types across thousands of cloud, SaaS and AI applications, over a billion websites, and countless data lakes, stores and private applications. This contextual intelligence and control goes far beyond basic application access rules, device posture and common activities (eg. upload or download) that legacy solutions are limited to.”

Its platform, network and AI-friendly tools enable Netskope to offer a broad portfolio of services, including software-defined wide area networking (SD-WAN), cloud access security broker (CASB), next-gen secure web gateway (Next-Gen SWG), zero-trust network access (ZTNA), data security posture management (DSPM), data loss prevention (DLP), and firewall-as-a-service (FWaaS). It is consistently ranked by analyst firms such as Gartner, IDC and Dell’Oro Group as one of the leading players in the SASE market, where it competes with the likes of Cato Networks, Versa Networks, Zscaler, Cisco, Palo Alto Networks, Broadcom (VMware), Fortinet, Cloudflare, Check Point Software Technologies and more.   

Netskope’s services are offered to enterprises via Netskope’s approved partners, including  telcos and managed service providers (MSPs) such as MetTel, Orange, SoftBank Corp, Telefónica and Telstra, systems integrators such as Tata Consultancy Services (TCS) and Wipro, value-added resellers (VARs) and more. 

As of 31 July, Netskope claims to have 4,317 customers (a 21% year-on-year increase from 3,571 customers at the end of July 2024), including more than 30% of the Fortune 100 (the top 100 of the Fortune 500). Its customer base is currently spread across 90 countries. 

The company’s SEC filing shows that the ramp up in customer numbers helped to bump up its revenues significantly during the first half of its current financial year. In the six months to the end of July, Netskope generated revenues of $328.5m, up by almost 31% from the $251.3m it generated in the six months to the end of July 2024. According to Netskope, its revenues for the 12 months to the end of July this year were $707m, up by 33%. 

However, the SASE specialist is far from profitable: It reported an operating loss of $91.3m for the six months to 31 July this year, though that is an improvement on the $160.7m operating loss recorded for the same period a year earlier.

But it believes its breadth of capabilities means its addressable market extends far beyond the current SASE market, the value of which is expected to reach anywhere between $17bn in 2029 (according to Dell’Oro) and $32.6bn in 2030 (according to Mordor Intelligence), depending on what is (or isn’t) included.

According to Netskope, “by converging advanced security and modern networking capabilities with deep analytics, based on our analysis of IDC data, we believe our unified solution addresses a large total addressable market that is projected to reach $138.9bn by 2028, growing at a 16.8% CAGR from 2024 to 2028, providing us with a sustained and durable opportunity. We believe we are in the early days of addressing the nascent market opportunity for AI security that we project will grow to $30.8bn by 2028, contributing an incremental $9.9bn to our estimated total addressable market by 2028.” 

There seems little doubt that Netskope’s AI capabilities, its strong enterprise security proposition and its position as a perennial leader in the still growing SASE market will make it attractive to investors but, as ever, that will depend on the price of the stock and the related valuation. Such details are likely to emerge during September as it heads for its debut on the Nasdaq, which is expected in late September of early October. 

- Ray Le Maistre, Editorial Director, TelecomTV