Netskope Approaches Morgan Stanley To Secure US IPO

Netskope had been waiting for the markets to stabilise but given the escalating geopolitical tensions, the expectations that the US IPO would receive strong activity have dropped.

In a bid to secure a US initial public offering (IPO), cybersecurity firm Netskope has hired financial services company Morgan Stanley. Reuters reported that sources have confirmed that this listing could raise more than $500 million. 

Netskope plans to go public in the third quarter of this year, which could potentially increase the company’s valuation to over $5 billion. These figures, however, are not set in stone, as factors like timing, valuation, and the total amount the offering would raise could change according to market conditions. 

Founded in 2012, Netskope is a cloud-based security software provider that helps its client companies protect their apps, websites, and data from cyber threats. The California-based company rivals fellow cybersecurity firms like Rubrik Inc. and Zscaler Inc. The company also boasts an illustrious client base, like Yamaha and Ross Stores Inc.  

Multinational firms like Morgan Stanley Tactical Value and Goldman Sachs Asset Management, among others, are investors in Netskope. The company was valued at $7.5 billion in 2021, but tech startups have faced significant drops in valuations in the years that followed. 

The company has been laying the foundation for the IPO since last year, as Chief Executive Sanjay Beri had confirmed with Reuters in an interview last June. Beri had revealed that while Netskope had no immediate plan to go public, preparations were underway, particularly since the firm amassed over $500 million in annual recurring revenue in 2024. 

With the Presidential elections due last November, Beri had said that Netskope was in no hurry to go public and that the company would consider it once the elections were over and the markets were more stable. For this highest-valued cybersecurity startup, an IPO would help raise awareness of its brand, and for the past year, Netskope has focused on investing in security products, expanding the platform and becoming more cash flow positive. 

Now, with firm is finally ready to go public and attain a US listing. The company had been waiting for the markets to stabilise but given the escalating geopolitical tensions and the threats surrounding an impending trade war, the expectations that the US IPO would receive strong activity have dropped.  

However, all is not lost, as companies are seeing some hope, as the present pause on tariffs by the US and other countries, particularly China, has come as a reprieve. Markets have been recovering and slowly picking up pace in recent weeks, and companies are optimistic that increased IPO activity is in the pipeline for this year. 

It was reported earlier this month that companies which had previously postponed their IPOs, citing market volatility, have since moved up their dates to go public. In April, Swedish fintech firm Klarna and San Francisco fintech Chime, along with US-based StubHub, delayed their initial offering after President Trump’s Liberation Day tariffs caused global markets to tumble. Companies sparked a global equity sell-off race and hurriedly backed out of acquisitions and IPO listings. 

However, a mere month later, when stock markets gained and trade tensions eased, financial research analysts pointed out that the IPO cycle was entering a period of revival and that investors would be looking for large discounts. The Israeli retail trading platform was one of the first to greenlight its highly anticipated New York flotation. Similarly, Chime also announced its plans to go ahead with its IPO listing.  

Therefore, it comes as no surprise that a company like Netskope, which had been working to go public for a year now, would announce its intentions just as the markets are showing signs of recovery. Global markets are subject to unexpected changes, particularly with US protectionist policies triggering a trade war across continents. However, companies are making the most of this short period of peace to move ahead with their financial ambitions.