Sacra estimates that Netskope hit $487M in annual recurring revenue (ARR) at the end of 2023, up 49% year-over-year, with roughly 2,750 customers for $177K average revenue per customer (ARPC).

Netskope is valued at $7.5 billion as of 2021, following significant investment activities including a $401 million convertible note round led by Morgan Stanley Tactical Value. Based on 2021 revenue of $210M and the $7.5B valuation, Netskope traded at a 35.7x revenue multiple. The company has raised over $1.4 billion in total funding across multiple rounds. Key investors include ICONIQ, Sequoia, and Accel, alongside Morgan Stanley Tactical Value. Their most recent financing was the $401 million convertible note round in 2021.

Netskope was founded in 2012 by Sanjay Beri, Krishna Narayanaswamy, Ravi Ithal, and Lebin Cheng. Beri, previously at Juniper Networks, recognized that as enterprises rapidly adopted SaaS applications, there was a growing need to migrate from on-prem to cloud-based security. The company emerged from stealth in October 2013 with $21 million in Series A funding from Social Capital and Lightspeed Venture Partners.

Netskope found initial product-market fit with large enterprises, particularly in financial services and healthcare, seeking visibility into cloud app usage. They started out with their core cloud access security broker (CASB) solution, which helped companies gain visibility and control over their SaaS applications.

The company's core product offering has evolved into a comprehensive Security Service Edge (SSE) platform, combining multiple cloud security functions:

1. Cloud Access Security Broker (CASB): Provides visibility and control over cloud app usage.

2. Next-Gen Secure Web Gateway (SWG): Protects against web-based threats and enforces policies.

3. Zero Trust Network Access (ZTNA): Enables secure remote access to internal applications.

4. Firewall-as-a-Service (FWaaS): Offers cloud-native network security.

Today, Netskope offers a comprehensive, cloud-native security platform that unifies these capabilities, along with advanced threat protection and data loss prevention, enabling enterprises to secure their digital assets and workforce from a single, integrated solution.

Netskope is a subscription-based SaaS company that provides cloud security solutions to enterprises. Netskope prices per user and sells top-down to the CISO, starting high in Fortune 500 accounts and expanding down.

Netskope's pricing model is primarily based on the number of users (seats) a company needs to protect, with additional factors such as the volume of data processed and the specific features required. The typical sales motion is top-down, with the Fortune 500 CISO as the archetypal buyer of the product.

Key expansion motions include adding more products (CASB, SWG, ZTNA, etc), protecting more users as enterprises consolidate security spend with Netskope, and upselling private access and IT-facing products.

The company often enters organizations with its core Cloud Access Security Broker (CASB) solution, then expands its footprint by cross-selling additional products such as Next-Gen Secure Web Gateway (SWG), Zero Trust Network Access (ZTNA), and Cloud Firewall, allowing Netskope to increase average revenue per customer over time.

Netskope has strategically stayed private for longer in order to invest heavily in R&D and product innovation. Public security companies typically spend only ~15% of revenue on R&D, whereas Netskope has had the freedom to invest more aggressively. This innovation-centric approach, combined with its strong culture, sets Netskope apart from legacy security vendors.

Looking ahead, Netskope seems primed for an IPO in the next 1-2 years. It has already raised $340M in its latest round and CFO Del Matto has hinted that IPO preparations are underway. However, the company is in no rush, with ample cash to continue fueling its growth. An IPO would further boost its brand awareness and stature as a leading enterprise security vendor.

Netskope competes in the rapidly evolving cloud security and network access market, facing competition from both established cybersecurity vendors and emerging cloud-native security providers.

As the market shifts towards integrated networking and security solutions, Netskope faces competition from vendors offering comprehensive SASE platforms. Key competitors in this space include Zscaler, Palo Alto Networks (Prisma SASE), and Cisco (Umbrella).

Against Zscaler, Netskope differentiates on data protection, user experience, and cloud-native architecture. It has more advanced CASB and DLP, its NewEdge infrastructure provides better performance, and its unified platform is easier to operate.

While Zscaler and Netskope are often compared head-to-head, Netskope's CASB heritage gives it an edge in cloud visibility, API-based security, DLP, and risk rating of cloud apps.

Zscaler's strength is in web filtering, but the future of SASE lies in understanding intent and context at the application layer, where Netskope has invested for longer.

Traditional network security vendors like Fortinet, Check Point, and Palo Alto Networks are also competing in the cloud security space, leveraging their existing customer bases and brand recognition to expand into cloud-based offerings.

Against these vendors, Netskope positions itself as the cloud-native alternative, with real-time visibility into application usage and data movement that provides a level of granularity that traditional firewall vendors struggle to match.

Many are taking an M&A approach, such as HPE acquiring Silver Peak for SD-WAN and Axis Security for SSE, but Zscaler and Netskope remain the pure-play leaders.

Despite the worst SaaS growth downturn in years, Netskope is still growing 30%+ YoY, benefiting from 1) cybersecurity's resistance to budget cuts, 2) continued enterprise migration to the cloud, and 3) the rise of generative AI as a data exfiltration risk surface.

Despite economic headwinds, cybersecurity remains a top priority for organizations, with 87% reporting that their security spend will increase in the next 12 months and 51% planning to add more vendors.

This trend favors best-of-breed, cloud-native platforms like Zscaler and Netskope, who are well-positioned to capture market share from incumbents like Cisco and Palo Alto Networks as enterprises seek more agile, effective solutions to secure their distributed workforces and cloud-based assets.

As enterprises pursue security vendor consolidation and shift from products to platforms, Netskope is well-positioned to capture more of the $30B+/year market for cloud-delivered network security.

The COVID-19 pandemic dramatically accelerated digital transformation, compressing 3-5 years of change into a matter of months. Enterprises rapidly adopted SaaS applications and new IT infrastructures—the average 1000+ employee company now uses over 1000 cloud apps from hundreds of vendors—creating sustained demand for cloud security tools.

The rapid adoption of generative AI tools like ChatGPT presents new risks for enterprises, as employees may inadvertently expose sensitive company data through these applications.

To mitigate this threat, organizations are turning to SASE platforms like Netskope, which provide granular visibility and control over SaaS usage, enabling security teams to enforce policies around the use of generative AI and prevent data leakage.