Netskope (NTSK) reported fiscal Q2 results with upside across the board as artificial intelligence helps extend its product roadmap and customer reach, Morgan Stanley said in a Thursday note.

Net new annual recurring revenue returned to positive growth of 9% year over year to $54 million, the firm said.

Netskope continues to see traction with its expanding portfolio of AI security products, led early on by Agent Broker and Agent Guardrails, Morgan Stanley said.

The firm added that about one-third of Netskope's AI related pipeline is currently in proof of concept, expanding its total addressable market, while about 50% of its sales resources continue to ramp.

Netskope posted fiscal Q2 revenue of $221 million, up 29% year over year, while remaining performance obligations grew 36% and net retention rate improved to 114%.

Morgan Stanley maintained its overweight rating on Netskope and raised its price target to $16 from $14.

Netskope shares were over 3% higher in Thursday trading.

Price: 14.29, Change: +0.54, Percent Change: +3.89