Core Viewpoint - Zscaler, Inc. experienced an 18.7% stock decline following the release of its fourth-quarter fiscal 2024 results, primarily due to disappointing profit outlook despite strong revenue and earnings growth [1] Group 1: Financial Performance - Zscaler reported a 30% year-over-year revenue growth, reaching $593 million, with a full-year revenue growth of 34% [2] - Billings increased by 27%, indicating strong customer demand for Zscaler's Zero Trust Exchange platform, with quarterly bookings surpassing $1 billion and annual recurring revenues (ARR) reaching $2.5 billion [2] - The operating margin was reported at 22% and free cash flow margin at 23% for the fourth quarter [6] Group 2: Market Position and Competitive Landscape - Zscaler holds a leading position in the zero-trust security market, serving over 8,700 customers and protecting nearly 50 million users globally [3] - The company's cloud-native platform differentiates it from competitors like Palo Alto Networks, Fortinet, and CrowdStrike, especially as zero-trust architectures become a security standard [4] Group 3: Profitability Concerns - The market's negative reaction was largely due to Zscaler's guidance for fiscal 2025, projecting billings growth to decelerate to 19%-20%, down from 27% in fiscal 2024, which is expected to compress profit margins [6] - CEO Jay Chaudhry emphasized that the shift in profitability is linked to aggressive investments in AI and cloud infrastructure rather than a fundamental business weakness [7] Group 4: Growth Opportunities - Zscaler is enhancing its AI-driven analytics, which is expected to drive upselling opportunities and strengthen its market position [8] - The demand for zero-trust security platforms is increasing due to rising cyberattacks, positioning Zscaler to capitalize on this trend with its cloud-native architecture [9] - The company is seeing strong momentum in emerging products like AI analytics, with generative AI solutions gaining traction [10] - Zscaler has expanded its presence in the federal market, securing a new cabinet-level agency as a client, which may enhance its foothold in the public sector [11] Group 5: Valuation and Technical Indicators - Zscaler's current valuation raises concerns, as it trades at a premium to the Zacks Internet – Services industry average based on a one-year forward price-to-sales (P/S) ratio [12] - The stock has dipped below its 50-day and 200-day moving averages, indicating potential downward pressure in the short term [13] Group 6: Conclusion - The recent stock price decline is viewed as an overreaction to short-term profitability concerns, with strong growth prospects due to Zscaler's market position and AI-driven initiatives [14]

A sales slowdown and a weak profit forecast gave cybersecurity investors reason to worry. Zscaler (ZS -17.70%) stock collapsed in morning trading Wednesday, down by 17.8% as of 12:04 p.m. ET, even though the company crushed analysts' forecasts for its fiscal fourth quarter when it reported after the closing bell Tuesday. Analysts had expected the cybersecurity company to report adjusted earnings of $0.69 per share on sales of $567.9 million for the quarter. Instead, its profits were $0.88 per share, and sal ...

Zscaler (ZS) reported better-than-expected fourth-quarter fiscal 2024 results. The company posted fourthquarter fiscal 2024 non-GAAP earnings of 88 cents per share, which beat the Zacks Consensus Estimate of 69 cents. It reported non-GAAP earnings of 64 cents in the year-ago quarter. Zscaler's fourth-quarter fiscal 2024 revenues were $592.86 million, which surpassed the Zacks Consensus Estimate of $567.62 million and increased 30% year over year. This improvement in revenues was on the back of increased suc ...

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Core Viewpoint - Zscaler's stock experienced a significant decline of 16% despite reporting better-than-expected earnings, indicating a disconnect between financial performance and market reaction [1]. Financial Performance - Zscaler reported a double beat in its latest earnings, surpassing both revenue and earnings expectations [1]. Market Reaction - The stock price drop occurred on September 3, 2024, following the earnings report, suggesting that investors may have had concerns beyond the reported financial metrics [1].

Just_Super Investment Thesis Zscaler (NASDAQ:ZS) delivers investors with a startling outlook for fiscal 2025. The company's next quarter will mark its tenth consecutive quarter of revenue growth deceleration and the market didn't take well to this outlook, with its stock sliding 15% after hours. Consequently, this means that including the sell-off in its market cap, the stock is still priced at 46x forward non-GAAP operating profits. This is not the most shocking valuation, but investors who pay this sort o ...

Key Takeaways Shares in Zscaler plunged in extended trading Tuesday after the provider of cloud-based cybersecurity services issued earnings guidance that came in significantly below analysts' expectations. Two rallies in the stock up to the 200-day MA in July and August have been met with considerable resistance, indicating underlying selling pressure. Amid earnings-driven weakness, investors should monitor key chart levels at $164, $143, and $135. Shares in Zscaler (ZS) plunged in extended trading Tuesday ...

Financial Data and Key Metrics - Revenue grew 30% YoY to $593 million in Q4, with full-year revenue reaching $2.17 billion, up 34% YoY [4][22] - Billings grew 27% YoY to $911 million in Q4, with full-year billings expected to grow 19-20% in fiscal 2025 [22][25] - Operating margin reached 22%, and free cash flow margin was 23% in Q4, with full-year free cash flow margin hitting a record 27% [4][22] - The company achieved $1 billion in quarterly bookings in Q4 and crossed $2.5 billion in ARR, expecting to reach $3 billion or more in ARR in fiscal 2025 [4][5] Business Line Performance - The Zero Trust Exchange platform secured 47 million users across nearly 8,700 customers, with strong demand for new and upsell business [6] - Emerging products, including ZDX, Zero Trust for Branch and Cloud, and AI analytics, contributed 22% of new and upsell business in fiscal 2024, up from 18% in fiscal 2023 [13] - The data protection pillar grew rapidly, with customers adopting advanced features, contributing to significant wins in healthcare and financial services [12][14] Market Performance - Americas represented 55% of revenue, EMEA 30%, and APJ 15% in Q4 [22] - The company added 13 cabinet-level agencies in the federal vertical, with significant upsell opportunities in the public sector [16] - Global 2000 customer penetration reached 35%, with 40% of Fortune 500 companies as customers [19] Strategy and Industry Competition - The company is expanding its platform beyond users to include applications, workloads, and IoT/OT devices, leveraging AI to address security gaps [6][7] - Zscaler's cloud platform surpassed $0.5 trillion daily transactions, enhancing its market leadership and enabling AI-driven innovations [8] - The company is investing in R&D and cloud infrastructure to scale with growing demand, focusing on long-term growth and profitability [27][28] Management Commentary on Operating Environment and Future Outlook - Management highlighted the worsening cyber threat environment, with an 18% increase in ransomware attacks blocked by Zscaler's cloud [9] - The company expects strong demand for Zero Trust and AI-driven security solutions, with a $96 billion addressable market opportunity [9] - Sales productivity improved in Q4, with expectations for further improvement in fiscal 2025, driven by strong pipeline and second-half acceleration [17][25] Other Important Information - The company plans to continue hiring at a strong pace in fiscal 2025, with a focus on R&D, sales, and marketing [77] - Zscaler introduced a business continuity service in January 2023, enhancing its resilience and reliability, which has become a key differentiator [20] Q&A Session Summary Question: Competitive landscape and newer SASE players [30] - Zscaler has not seen meaningful competition from newer SASE players, as its proven architecture and resilience give it a significant advantage [31][32] Question: Impact of Microsoft and CrowdStrike outages on customer strategies [35] - Customers are increasingly focused on resilience, with Zscaler's business continuity plan gaining traction among large customers [36][37] Question: Billings guidance and conservatism [40] - Billings guidance reflects a second-half weighted growth, driven by scheduled billings from prior contracts and improved sales productivity [41][42] Question: Pricing dynamics and competitive environment [54] - Zscaler is able to handle pricing pressures by demonstrating cost savings through the consolidation of multiple point products [55][56] Question: Emerging products and their contribution [70] - Emerging products, including ZPA and ZIA, are expected to grow, with ZPA now representing over 40% of new business between the two products [70][71] Question: Headcount growth and investment areas [76] - Zscaler plans moderate headcount growth in fiscal 2025, with investments across R&D, sales, marketing, and cloud infrastructure [77] Question: Early indications of new sales leadership impact [80] - The new sales leadership has driven a shift to account-centric selling, resulting in increased upsell and large deal activity [80][81]

Zscaler (ZS) came out with quarterly earnings of $0.88 per share, beating the Zacks Consensus Estimate of $0.69 per share. This compares to earnings of $0.64 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of 27.54%. A quarter ago, it was expected that this cloudbased information security provider would post earnings of $0.65 per share when it actually produced earnings of $0.88, delivering a surprise of 35.38%. Over the last fou ...

Financial Performance - Revenue for Q4 fiscal 2024 increased by 30% year-over-year to $592.9 million[1] - Calculated billings grew 27% year-over-year to $910.8 million[1] - Deferred revenue reached $1,895.0 million, reflecting a 32% year-over-year increase[1] - Full year fiscal 2024 revenue increased by 34% year-over-year to $2,167.8 million[5] - Revenue for the three months ended July 31, 2024, was $592.868 million, a 30.3% increase from $455.006 million in the same period of 2023[24] - Gross profit for the three months ended July 31, 2024, was $462.663 million, up from $352.324 million in the same period of 2023, representing a 31.3% increase[24] - Total operating expenses increased to $489.613 million for the three months ended July 31, 2024, compared to $396.876 million in the same period of 2023, reflecting a 23.3% rise[24] - The company reported a net cash provided by operating activities of $779.846 million for the year ended July 31, 2024, compared to $462.343 million for the year ended July 31, 2023[28] - Free cash flow for the quarter was $136.318 million, compared to $101.301 million in the prior year, reflecting a 34.6% increase[35] Profitability - GAAP net loss narrowed to $14.9 million from $30.7 million in Q4 fiscal 2023[3] - Non-GAAP net income for Q4 was $140.6 million, up from $100.9 million year-over-year[3] - The net loss for the three months ended July 31, 2024, was $14.878 million, an improvement from a net loss of $30.674 million in the same period of 2023[24] - Non-GAAP net income for the quarter was $140.596 million, up from $100.857 million year-over-year, representing a 39.4% increase[33] - Non-GAAP operating margin improved to 22% for the quarter, compared to 19% in the same quarter last year[33] - Non-GAAP gross profit for the three months ended July 31, 2024, was $481.036 million, compared to $367.105 million in the same period of 2023, reflecting a 30.9% increase[29] Cash Flow and Liquidity - Cash provided by operations was $203.6 million, or 34% of revenue, compared to 30% in Q4 fiscal 2023[4] - Cash and cash equivalents at the end of the period were $1.423 billion, an increase from $1.262 billion at the end of the same period in 2023[28] - Free cash flow margin for the quarter was 23%, compared to 22% in the same quarter last year[37] Assets and Liabilities - Total assets as of July 31, 2024, were $4.705 billion, up from $3.608 billion as of July 31, 2023, indicating a 30.4% growth[26] - Total liabilities increased to $3.431 billion as of July 31, 2024, compared to $2.883 billion as of July 31, 2023, marking a 19.0% increase[26] - Deferred revenue as of July 31, 2024, was $1.895 billion, an increase from $1.440 billion as of July 31, 2023, representing a 31.5% growth[26] Future Outlook - For fiscal 2025, the company expects revenue of approximately $2.60 billion to $2.62 billion[11] - The company plans to establish a projected non-GAAP tax rate of 23% effective August 1, 2024, to enhance consistency in reporting[39] - The company plans to implement a long-term projected non-GAAP tax rate of 23% starting August 1, 2024, to enhance consistency in reporting[43] Innovations and Market Position - Zscaler's cloud platform surpassed half a trillion daily transactions, indicating strong customer adoption[7] - The company launched multiple innovations in AI Data Protection capabilities to enhance data security[8] Non-GAAP Measures - The company emphasizes that non-GAAP measures should not be viewed in isolation and are subject to limitations compared to GAAP measures[42] - Zscaler's restructuring and other charges are excluded from non-GAAP measures as they do not reflect ongoing operational performance[43] - The company aims to provide better consistency and comparability with past performance through its non-GAAP financial measures[42] - Non-GAAP net income per share, diluted, is calculated by excluding stock-based compensation and other non-recurring charges, providing a clearer view of profitability[44] - Non-GAAP operating margin is defined as non-GAAP income from operations as a percentage of revenue, highlighting operational efficiency[44] - Calculated billings reflect revenue plus changes in deferred revenue, aiming to capture amounts invoiced for subscriptions to the cloud platform[44]