TLDR
- Netskope shares opened at $23, up 21% from the $19 IPO price, giving the cybersecurity firm an $8.79 billion market cap
- The company raised $908.2 million by selling 47.8 million shares at the top of its pricing range
- Netskope’s revenue grew to $328 million in the six months ended July 31, while net loss narrowed to $170 million
- The IPO comes during the strongest U.S. IPO market momentum in years, with last week being the busiest since 2021
- Cybersecurity remains in high demand due to increasing frequency and sophistication of cyberattacks
Netskope made a strong entrance to public markets Thursday, with shares jumping 21% on their first day of trading. The cybersecurity company opened at $23 per share, well above its $19 IPO price.
The Santa Clara-based firm raised $908.2 million through its initial public offering. It sold 47.8 million shares at the top end of its revised pricing range of $17 to $19.
The debut gives Netskope a market capitalization of $8.79 billion. This valuation represents growth from its last private funding round in 2021, when it was valued at over $7.5 billion.
Netskope was founded in 2012 and develops cloud security software. The company’s products protect cloud applications, secure web traffic, and enable remote access while safeguarding data.
The firm has been benefiting from increased corporate security spending. Companies are ramping up their cybersecurity investments due to more frequent and sophisticated attacks.
Netskope’s financial performance has shown improvement over the past year. Revenue grew to $328 million in the six months ended July 31, up from $251 million in the same period last year.
The company’s net loss also narrowed during this period. It reported a loss of $170 million compared to $207 million in the previous year.
Strong IPO Market Conditions
The successful debut comes during a particularly active time for public offerings. The U.S. IPO market is experiencing its strongest momentum in years.
Last week alone, more than half a dozen companies raised over $4 billion combined. This made it the busiest week for U.S. IPOs since 2021.
Companies are rushing to go public while market conditions remain favorable. They want to tap public markets before the window potentially closes.
Several recent tech IPOs have performed well in their debuts. Design software maker Figma and stablecoin issuer Circle both delivered strong first-day performances.
Market Reception and Competition
Industry analysts are watching Netskope’s performance closely. Cybersecurity remains one of the few tech sectors with clear structural demand.
However, recent cybersecurity IPO performances have been mixed. While Rubrik shares have more than doubled since their debut, SailPoint has struggled to trade above its offer price.
Kat Liu, vice president at IPO research firm IPOX, noted the importance of Netskope’s debut for the sector. She highlighted cybersecurity’s strong demand drivers despite mixed recent performances.
Greg Martin from Rainmaker Securities emphasized that long-term performance will depend on several factors. These include broader market conditions, profitability trends, and execution in a competitive space.
Netskope competes with established players like Palo Alto Networks and Zscaler. The company will need to differentiate itself in this crowded market.
The cybersecurity firm’s previous private funding round was led by investment firm ICONIQ in 2021. That round established the $7.5 billion valuation that the company has now exceeded.
Investors showed robust appetite for the offering, with shares pricing at the top of the range. The company had initially set a lower pricing range before bumping it up due to strong demand.
