Netskope CFO Sells $856K in Stock as Shares Sit 13% Below IPO Price

Andrew H. Del Matto, the chief financial officer of Netskope (NASDAQ:NTSK), executed a direct open-market sale of 49,875 shares on Jan. 6, following the conversion of derivative securities, as disclosed in an SEC Form 4 filing.

Transaction summary

Transaction value based on SEC Form 4 weighted average purchase price ($17.16); post-transaction value based on Jan. 6 market close ($16.63).

Key questions

• What was the context of this sale in terms of derivative securities?
  The entire 49,875-share sale resulted from the conversion of a derivative security into Class A Common Stock, as noted in the filing.
• How did this transaction impact Del Matto's ownership stake?
  The sale reduced Del Matto's direct shareholdings of Class A common stock by over half, from 91,368 to 41,493 shares.
• Were any indirect holdings or affiliated entities involved in this transaction?
  No; all shares sold were held directly, and Del Matto reported zero indirect holdings after the transaction, with no trusts or other affiliated entities listed in the filing.
• Does the sale represent a change in selling cadence or intent?
  Given the limited remaining direct holdings and recent administrative transactions, the size of this sale is in line with the capacity constraints imposed by previous dispositions, not an acceleration in selling activity.

Company overview

Company snapshot

• Netskope offers a unified cloud security platform, "Netskope One," providing data protection, secure access, threat prevention, and networking optimization for SaaS, web, hybrid, and AI workloads.
• The company operates a subscription-based business model focused on enterprise customers seeking advanced cloud and data security solutions.
• It serves large organizations with significant SaaS and hybrid cloud adoption, particularly those requiring comprehensive cloud security.

Netskope is a technology company specializing in cloud security solutions, with a focus on protecting data and enabling secure access across cloud, web, and SaaS environments. Its unified platform addresses the evolving security needs of modern enterprises as organizations transition to hybrid and AI-driven workloads.

What this transaction means for investors

The sale followed the conversion of derivative securities into Class A stock, and the filing is explicit about the reported shares being sold to satisfy tax obligations in connection with the settlement of restricted stock units, making this a structurally driven transaction rather than a discretionary trim. After the sale, Del Matto retained 41,493 directly held shares, keeping meaningful equity exposure as the company works to scale profitability.

Operationally, Netskope’s most recent quarter showed momentum that long-term investors should track more closely than insider selling. Third-quarter revenue rose 33% year over year to $184.2 million, while annual recurring revenue climbed 34% to $754 million. Importantly, the company crossed $1 billion in remaining performance obligations and generated positive free cash flow of $10.6 million, a notable milestone for a recently public software firm. Finally, cash and marketable securities totaled roughly $1.2 billion at quarter-end, giving Netskope flexibility to fund growth without near-term balance sheet pressure.

Shares are down roughly 13% from their September IPO price, but with Netskope still very early in its public life, the sale seems less important to follow than fundamentals.

Glossary

Form 4: A required SEC filing disclosing insider trades of company stock by officers, directors, or major shareholders.

Derivative securities: Financial instruments whose value is based on the price of another asset, such as options or warrants.

Direct open-market sale: When an insider sells company shares directly on a public exchange, not through private or pre-arranged transactions.

Weighted average price: The average price per share in a transaction, accounting for varying prices across multiple trades.

Direct holdings: Shares owned personally by an individual, not through trusts or other entities.

Indirect holdings: Shares owned through affiliated entities, such as trusts or family members, rather than held personally.

Disposition: The act of selling or otherwise transferring ownership of an asset, such as company shares.

Class A common stock: A category of company shares, often with specific voting rights or privileges.

Outstanding shares: The total number of a company’s shares currently held by all shareholders, including insiders and the public.

Affiliated entities: Organizations or accounts connected to an insider, such as family trusts or controlled companies.

Cadence: The frequency or pattern of transactions, such as how often an insider sells shares.

TTM: The 12-month period ending with the most recent quarterly report.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.