Zscaler Raises Guidance on Rising Cloud Based Cybersecurity Demand

Zscaler shares soared 10% after beating earnings expectations and raising guidance for the fiscal fourth quarter. $ZS’s fiscal 2023 outlook came in above views. The digitization of business underscored that the shift continues to benefit $ZS with the surge in demand for its cloud security products. $ZS shares jumped on the release in the extended session Thursday 12%, following a 4.4% rise in the regular session.

Zscaler Fiscal Fourth Quarter Earnings

  • Zscaler (ZS) beat by $0.04, beat on revs
  • Guided Q1 EPS above consensus, revs above consensus.
  • Guide FY23 EPS above consensus, revs above consensus
  • $ZS up 10.9

ZS earnings were 25 cents a share on an adjusted basis, up 78% from 14 cents a year earlier. In the July quarter, revenue rose 61% to $318.1 million. Analysts expected Zscaler earnings of 21 cents per share on sales of $305.4 million. Billings rose 57% to $520.4 million, compared with estimates for $467.2 million.

“Despite the uncertain macroeconomic landscape which continues to evolve, we continue to see favorable demand for our Zero Trust Exchange platform because it makes businesses more secure, simplifies IT, and reduces cost,” Chief Executive Jay Chaudhry said in the company’s earnings release.

  • Revenue grows 61% year-over-year to $318.1 million
  • Calculated billings grows 57% year-over-year to $520.4 million
  • Deferred revenue grows 62% year-over-year to $1,021.1 million
  • GAAP net loss of $97.7 million compared to GAAP net loss of $81.0 million on a year-over-year basis
  • Non-GAAP net income of $36.4 million compared to non-GAAP net income of $20.3 million on a year-over-year basis
  • Cash, cash equivalents and short-term investments: $1,731.3 million as of July 31, 2022, an increase of $228.8 million from July 31, 2021.

Outlook

Businesses are continually ramping up efforts to secure their workflows and protect their data from cyberattacks.

  • For fiscal 2023, which starts with the October quarter, Zscaler said it expects earnings of $1.17 a share at the midpoint of its outlook, ahead of estimates for $1.04 a share.
  • Zscaler said it expects revenue in a range of $1.49 billion to $1.50 billion. Analysts had predicted revenue of $1.468 billion.

Zscaler Private Access, or ZPA cloud service

One of Zscaler’s key differentiating factors is its ability to deliver zero trust security, the Zscaler Private Access, or ZPA cloud service, replaces virtual private networks, or VPNs, to support remote work. Users can only connect to applications, not the network. This technology creates a competitive advantage for ZS, as made evident by its top vertical: financial services. Banks and other financial services companies need to protect incredibly sensitive data as well as billions of dollars. Eight of the top ten global banks outside of China trust Zscaler to defend against cyberattacks.

ZDX and ZCP

ZPA is Zscaler’s top product for new and upsell business. Emerging products, ZDX and ZCP, which work alongside ZPA create stickiness and allow ZS to continue its aggressive growth moving forward.

  • ZDX enables businesses to monitor user devices to detect productivity issues amongst other features.
  • ZCP is Zscaler’s cloud protection solution.

As businesses continue their digital transformations, ZS’s emerging products will continue to be a necessity. Their ability to scale with a company also allows adoption amongst organizations of all sizes.
ZS’s zero trust architecture and its refusal to trust that any users are who they say they are, all without compromising fluidity when doing business.

Zscaler Growth

At the core of ZS’s robust growth is strengthening demand for its Zero Trust Exchange platform which allows companies to securely connect employees to cloud-based applications. The WFA transition substantially increased the number of devices outside the office that need to be protected. At the same time the amount of data being moved off-premises to the cloud is expanding exponentially and many indicated are that this will continue as the Covid economy leaves permanent culture changes. It is also fair to say that ZS’s cloud security products are gaining traction across a spectrum of business sizes and verticals.

Source: TradersCommunity, Zscaler, Alpha Street

From The TradersCommunity News Desk