Netskope raises US$908m from NYSE IPO
Netskope has raised US$908m from its NYSE IPO, overcoming the valuation stigma attached to some enterprise software companies.
Amid huge investor demand, joint bookrunners Morgan Stanley and JP Morgan priced 47.8m new shares at US$19, the top of an upwardly revised US$17–$19 range and the US$15–$17 range at launch.
The cybersecurity specialist closed first-day trading on Thursday at US$22.49, 18.4% above offer as investors were forced to fill out positions in the aftermarket.
With a book of demand north of 20 times covered, including four times from long-only accounts, the banks were able to concentrate half of the shares sold with the top 10 accounts. About 20% of the investors who put in for the deal received no stock at all.
Netskope is a positive signpost for software companies. This is only the sixth US-listed software IPO this year, compared with 58 software IPOs back in 2021 and six in all of last year.
Seven software companies have raised US$6bn from US-listed IPOs this year.
“The backdrop now is very conducive with a ton of macro tailwinds,” said one banker involved in the Netskope offering. “Stocks are at an all-time high and volatility is relatively stable. Netskope is in the company of a very good gathering of subsectors that benefit from them. That makes it a good traditional tech IPO that goes up about 20% on the first day.”
Software group SailPoint raised an upsized US$1.38bn on its Nasdaq IPO in February amid similarly strong demand, in a deal that was led by Morgan Stanley. Despite pricing at the top of the upwardly revised range, the stock fell 4.4% on debut and is trading below offer.
As of the debut close, Netskope captured an equity market capitalisation of US$10.6bn, well above the US$7.5bn it fetched on a US$300m Series H private round in 2021 led by tech-focused investment firm ICONIQ.
Netskope pivoted from the Series H to a US$401m 3.75% PIK CB in 2022 and in late 2024 raised another US$75m 3% PIK CB, with both convertible at US$23.75 and US$29.02 respectively.
Netskope, which counts more than 30% of Fortune 100 clients, grew annual recurring revenue by 33% to US$707m at July 31.
The IPO gives Netskope US$1bn of cash to provide flexibility to repay the CBs as well as to help grow the business. There is now US$700m of PIK CBs outstanding.