Zscaler, a leading security-software company, has announced impressive financial results for its fiscal first quarter, ending Oct. 31. Despite the positive news, the stock has experienced a slight decline due to indications of increased spending by management.
Exceeding Expectations
Zscaler reported revenue of $496.7 million for the quarter, representing a significant 40% increase compared to the previous year. This surpasses the company’s earlier forecast of $470 million to $472 million and exceeds the consensus estimate of $473 million provided by analysts tracked by FactSet.
Adjusted profits also outperformed expectations, coming in at 67 cents per share. This result is higher than Zscaler’s projected range of 48 to 49 cents and beats the consensus forecast of 49 cents. However, under generally accepted accounting principles, the company recorded a loss of $33.5 million during the quarter.
Billings experienced a healthy rise, reaching $456.6 million, indicating a substantial 34% increase. This result is above the Street consensus estimate of $441 million.
Meeting Growing Demand
CEO Jay Chaudhry emphasized the company’s commitment to meeting the increasing demand by stating, “We are scaling our go-to-market and R&D organizations, strengthening our foundation for the long-term growth of our business.” While this strategy aligns with Zscaler’s future goals, it may result in higher costs. It is possible that this expectation of increased spending explains the market’s lukewarm response to an otherwise strong performance.
Overall, Zscaler’s financial results for the first quarter reflect robust growth and provide an optimistic outlook for the company’s future.
Zscaler Announces New Additions to Management Team
Zscaler, a leading cybersecurity company, recently welcomed two new members to its management team. Mike Rich, the former president of the Americas for ServiceNow, has been appointed as the Chief Revenue Officer. Joyce Kim, who previously held the position of Chief Marketing Officer at Twilio, will now take on the same role at Zscaler.
Despite these exciting developments, Zscaler’s shares experienced a slight decline of 6.7%, trading at $179.
Positive Growth and Strong Projections
Zscaler is optimistic about its performance in the upcoming months. The company expects to generate between $505 million and $507 million in revenue for the January quarter. Additionally, adjusted profits are projected to range from 57 to 58 cents per share. These figures surpass Wall Street’s expectations of $496 million in revenue and adjusted per-share earnings of 52 cents.
Looking further ahead, Zscaler has revised its revenue forecast for the fiscal year 2024. The company now anticipates revenue between $2.09 billion and $2.10 billion, with adjusted profits ranging from $2.45 to $2.48 per share. This update is an improvement from the previous projection of revenue between $2.05 billion and $2.065 billion, and adjusted profits of $2.20 to $2.25 per share. Notably, Zscaler maintains its original forecast for billings, which are expected to fall between $2.52 billion and $2.56 billion.
Positive Outlook for the Future
Zscaler’s full-year guidance reflects its outstanding performance in the October quarter and its promising outlook for the January quarter. This strong start suggests that there will be no significant changes to the company’s expectations for the second half of fiscal 2024.
