Netskope Inc Leases Disclosure
Note 8 - Leases
The Company has entered into non-cancelable operating lease agreements to lease offices and space and racks at data center facilities with various expiration dates through fiscal year 2036, inclusive of the option to extend the term for the office lease in Santa Clara, California for one additional 5-year term, which is determined with reasonable certainty that the Company will exercise such option. The Company's operating lease arrangements do not contain any restrictive covenants or residual value guarantees. The Company is required to pay property taxes, insurance and normal maintenance costs for certain of these facilities.
In June 2024, the Company entered into a lease amendment to reduce the leased space, adjust the base rent, and extend the term of its office lease in Santa Clara, California to 2030, with an option to extend for one additional 5-year period. The modification resulted in additional right-of-use assets and corresponding lease liabilities of $5.6 million, which were recorded during the year ended January 31, 2025.
In December 2023, the Company ceased to use a portion of the Company's leased office space in Santa Clara, California and entered into an agreement to sublease the space. The sublease commenced in February 2024 and terminated in November 2025. The Company recognized a loss of $1.3 million as a result of the impairment of related right-of-use assets during the year ended January 31, 2024. The sublease income for the fiscal years ended January 31, 2026, 2025, and 2024 were immaterial.
Supplemental cash flow information related to the Company's operating leases for the fiscal years ended January 31, 2026, 2025, and 2024, as well as the weighted-average remaining lease term and weighted-average discount rate as of January 31, 2026 and 2025, were as follows (amount in thousands, except lease term and discount rate data):
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|
Year Ended January 31, |
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|
|
2026 |
|
|
2025 |
|
|
2024 |
|
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Supplemental Cash Flow Information |
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|
|
|
|
|
|
|
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Cash paid for amount included in the measurement of operating |
|
$ |
16,001 |
|
|
$ |
15,305 |
|
|
$ |
13,753 |
|
Operating lease ROU assets obtained in exchange for operating |
|
$ |
11,242 |
|
|
$ |
13,164 |
|
|
$ |
11,078 |
|
|
|
January 31, |
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|
|
2026 |
|
|
2025 |
|
||
Weighted-average remaining lease term (years) |
|
|
6.2 |
|
|
|
7.0 |
|
Weighted-average discount rate |
|
|
7.3 |
% |
|
|
7.6 |
% |
The components of lease costs for the fiscal years ended January 31, 2026, 2025, and 2024 consisted of the following (in thousands):
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|
Year Ended January 31, |
|
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|
|
2026 |
|
|
2025 |
|
|
2024 |
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Operating lease costs |
|
$ |
22,763 |
|
|
$ |
19,810 |
|
|
$ |
17,685 |
|
Short-term lease costs |
|
|
386 |
|
|
|
652 |
|
|
|
863 |
|
Variable lease costs |
|
|
3,564 |
|
|
|
3,258 |
|
|
|
2,026 |
|
Total lease costs |
|
$ |
26,713 |
|
|
$ |
23,720 |
|
|
$ |
20,574 |
|
Future operating lease payments as of January 31, 2026 were as follows (in thousands):
Fiscal Years Ending January 31, |
|
Amount |
|
|
2027 |
|
|
12,791 |
|
2028 |
|
|
5,948 |
|
2029 |
|
|
4,174 |
|
2030 |
|
|
3,637 |
|
2031 |
|
|
3,245 |
|
Thereafter |
|
|
13,626 |
|
Total operating lease payments |
|
$ |
43,421 |
|
Less: Imputed interest |
|
|
(9,228 |
) |
Present value of operating lease liabilities |
|
$ |
34,193 |
|
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.