Here's our initial take on Zscaler's (ZS 1.36%) fiscal 2025 second-quarter financial report.Key MetricsMetricQ2 2024Q2 2025Changevs. ExpectationsRevenue$525.0 million$647.9 million+23%BeatAdjusted earnings per share$0.63$0.78+24%BeatFree cash flow$100.8 million$143.4 million+42%n/aCalculated billings$627.6 million$742.7 million+18%n/aZero Trust and AIZscaler beat expectations in the second quarter of fiscal 2025, reporting 23% revenue growth. The company's Zero Trust platform continued to win over customers ...

Zscaler, Inc. (NASDAQ:ZS) Q2 2025 Earnings Conference Call March 5, 2025 4:30 PM ET Company Participants Ashwin Kesireddy - VP, IR and Strategic Finance Jay Chaudhry - Chairman and CEO Remo Canessa - CFO Conference Call Participants Saket Kalia - Barclays Brad Zelnick - Deutsche Bank Mike Cikos - Needham Shrenik Kothari - Baird Roger Boyd - UBS Brian Essex - JPMorgan Gregg Moskowitz - Mizuho Fatima Boolani - Citigroup Joseph Gallo - Jefferies Matt Hedberg - RBC Capital Markets Joshua Tilton - Wolfe Research ...

Group 1: Earnings Performance - Zscaler reported quarterly earnings of $0.78 per share, exceeding the Zacks Consensus Estimate of $0.69 per share, and showing an increase from $0.76 per share a year ago, representing an earnings surprise of 13.04% [1] - The company posted revenues of $647.9 million for the quarter ended January 2025, surpassing the Zacks Consensus Estimate by 2.18%, and up from $525 million in the previous year [2] - Over the last four quarters, Zscaler has consistently surpassed consensus EPS estimates and revenue estimates [2] Group 2: Stock Performance and Outlook - Zscaler shares have increased approximately 7.4% since the beginning of the year, contrasting with the S&P 500's decline of -1.8% [3] - The future performance of Zscaler's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4][6] - The current consensus EPS estimate for the upcoming quarter is $0.73 on revenues of $664.5 million, and for the current fiscal year, it is $2.99 on revenues of $2.64 billion [7] Group 3: Industry Context - The Zacks Security industry, to which Zscaler belongs, is currently ranked in the top 18% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - The performance of Zscaler's stock may also be influenced by the overall industry outlook and trends in earnings estimate revisions [5][8]

Zscaler" Fiscal Q2 2025 Earnings Call March 5, 2025 Safe Harbor FORWARD-LOOKING STATEMENTS Unless otherwise noted, all numbers presented will be on an adjusted, non-GAAP basis. Reconclitation of GAAP to non-GAAP financial measures is in the appendix of this presentation. This gresentation has been prepared by Zscaler") for informational purposes only and not for any other purcoses .Nothing contained in this presentation is or should be construed as, a recommendation, promise or representation by the present ...

Core Insights - Zscaler reported strong financial performance in Q2 2025, with revenue of $647.9 million and non-GAAP EPS of $0.78, both exceeding market expectations [2][3] - The company's growth is attributed to its Zero Trust and AI strategies, which are enhancing its cloud-native security solutions [1][5] Financial Performance - Revenue increased by 23.4% year-over-year from $525 million in Q2 2024 to $647.9 million in Q2 2025 [3][6] - Non-GAAP EPS rose by 23.8% from $0.63 in Q2 2024 to $0.78 in Q2 2025 [3][6] - Calculated billings reached $742.7 million, reflecting an 18.3% increase from the previous year [3] - Free cash flow grew by 42.2% from $100.8 million to $143.4 million [3][7] - Deferred revenue increased by 25% to $1,878.5 million, indicating strong subscription interest [7] Business Strategy - Zscaler focuses on its Zero Trust Exchange platform, which enhances security by allowing users access only to necessary resources [4] - The company is integrating AI into its platform to improve security outcomes and expand its market presence, particularly in federal agencies and international markets [5] Operational Highlights - The company upgraded its Zero Trust Network Access and integrated with RISE with SAP solutions to enhance data protection for remote users [8] - Phil Tee was appointed as EVP of AI Innovations to drive AI-driven security enhancements [8] Future Projections - For Q3 2025, Zscaler projects revenue between $665 million and $667 million, with non-GAAP EPS expected to be between $0.75 and $0.76 [10] - Annual revenue projections are between $2.640 billion and $2.654 billion, reflecting confidence in the demand for Zero Trust capabilities [10]

Financial Performance - Revenue grew 23% year-over-year to $647.9 million[8] - Calculated billings increased 18% year-over-year to $742.7 million[8] - Deferred revenue rose 25% year-over-year to $1,878.5 million[8] - GAAP net loss was $7.7 million, an improvement from a loss of $28.5 million in the same quarter last year[9] - Non-GAAP net income increased to $127.1 million from $99.4 million year-over-year[9] - Cash provided by operations was $179.4 million, representing 27% of revenue[9] - Free cash flow reached $143.4 million, or 22% of revenue[9] - Revenue for the three months ended January 31, 2025, was $647.9 million, a 23.3% increase from $525.0 million in the same period of 2024[25] - Gross profit for the six months ended January 31, 2025, reached $985.9 million, up 24.3% from $793.1 million in the prior year[25] - Non-GAAP gross profit for the three months ended January 31, 2025, was $520.8 million, reflecting a non-GAAP gross margin of 80%[31] - The net loss for the three months ended January 31, 2025, was $7.7 million, compared to a net loss of $28.5 million in the same period of 2024[25] - Non-GAAP income from operations for the six months ended January 31, 2025, was $274.6 million, with a non-GAAP operating margin of 22%[31] - Non-GAAP net income for the six months ended January 31, 2025, was $251.3 million, up 35.2% from $185.8 million in the same period of 2024[36] - Non-GAAP net income per share, diluted, for the three months ended January 31, 2025, was $0.78, compared to $0.63 for the same period in 2024, reflecting a 23.8% increase[36] Cash Flow and Assets - Cash and cash equivalents increased to $1.76 billion as of January 31, 2025, from $1.42 billion at the end of July 2024[27] - Total assets grew to $5.01 billion as of January 31, 2025, compared to $4.70 billion as of July 31, 2024[27] - Net cash provided by operating activities for the six months ended January 31, 2025, was $510.8 million, compared to $402.9 million in the same period of 2024[29] - Free cash flow for the six months ended January 31, 2025, was $435.3 million, a 33.7% increase from $325.5 million in the same period of 2024[36] - Free cash flow margin for the three months ended January 31, 2025, was 22%, compared to 19% for the same period in 2024[36] Operating Expenses and Tax - Operating expenses for the three months ended January 31, 2025, totaled $539.5 million, a 19.0% increase from $453.3 million in the same period of 2024[25] - The company recognized a tax benefit of $17.2 million due to the release of a valuation allowance on U.K. deferred tax assets during the three months ended January 31, 2025[25] - The company reported a non-GAAP effective tax rate of 23% for both the three and six months ended January 31, 2025[36] - The company plans to continue assessing its non-GAAP tax rate regularly, which is currently set at 23%[40] Future Guidance - Guidance for Q3 fiscal 2025 expects revenue of $665 million to $667 million[14] - Full year fiscal 2025 revenue guidance is approximately $2.640 billion to $2.654 billion[14] Product Development - Introduced the industry's first Zero Trust Segmentation solution for branches and cloud environments[9] Deferred Revenue - Total deferred revenue at the end of the period was $1.88 billion, up from $1.50 billion at the end of the same period in 2024[36] Stock-Based Compensation - Stock-based compensation expense for the three months ended January 31, 2025, was $176.4 million, compared to $145.5 million for the same period in 2024[36]

Second Quarter Highlights Revenue grows 23% year-over-year to $647.9 millionCalculated billings grows 18% year-over-year to $742.7 millionDeferred revenue grows 25% year-over-year to $1,878.5 millionGAAP net loss of $7.7 million compared to GAAP net loss of $28.5 million on a year-over-year basis Non-GAAP net income of $127.1 million compared to non-GAAP net income of $99.4 million on a year-over-year basis SAN JOSE, Calif., March 05, 2025 (GLOBE NEWSWIRE) -- Zscaler, Inc. (Nasdaq: ZS), the leader in cloud ...

Core Viewpoint - Zscaler Inc is set to report its second-quarter earnings, with Wall Street expecting an EPS of 69 cents and revenues of $635.56 million, while the stock has experienced a decline of 7.09% over the past year but is up 5.54% year-to-date [1] Group 1: Stock Performance and Trends - The stock is currently in a strongly bearish trend, trading below its five-day, 20-day, and 50-day exponential moving averages, with a current price of $192.17 [2] - Key simple moving averages indicate downward momentum, with the eight-day at $193.62, 20-day at $203.06, and 50-day at $195.44 [2] - The Moving Average Convergence Divergence (MACD) indicator at negative 2 suggests that bearish momentum remains intact, although there are signs of buying pressure [3] Group 2: Technical Indicators - Zscaler's 200-day simple moving average at $188.51 is below the current stock price, indicating longer-term support [3] - The Relative Strength Index (RSI) at 43.06 suggests that the stock is not yet oversold but may be approaching a level where buyers could step in [3] Group 3: Analyst Ratings and Price Targets - The consensus analyst rating on Zscaler stock is currently a Buy, with a price target of $227.79 [5] - Recent analyst ratings from Rosenblatt, Barclays, and Mizuho imply a 15.59% upside for Zscaler stock, with an average price target of $221.67 [5]

Zscaler, Inc. ZS will release its second-quarter financial results, after the closing bell, on Wednesday, March 5.Analysts expect the San Jose, California-based company to report quarterly earnings at 69 cents per share, down from 76 cents per share in the year-ago period. Zscaler projects quarterly revenue of $635.35 million, compared to $525 million a year earlier, according to data from Benzinga Pro.On Dec. 2, 2024, Zscaler reported first-quarter revenue of $628 million, beating the consensus estimate of ...

Core Viewpoint - Zscaler is set to report its second-quarter fiscal 2025 results, with expectations of revenue growth and a decline in earnings per share compared to the previous year [1][2][3]. Revenue Expectations - Zscaler anticipates revenues between $633 million and $635 million for the second quarter of fiscal 2025, with a Zacks Consensus Estimate of $634.1 million, indicating a year-over-year growth of 20.78% [2]. - Revenue estimates from Channel Partners and Direct Customers are projected at $577.1 million and $56.2 million, respectively, with a remaining performance obligation of approximately $4.2 billion at the end of the quarter [10]. Earnings Projections - The company expects non-GAAP earnings per share in the range of 68-69 cents, with the Zacks Consensus Estimate also at 69 cents per share, reflecting a year-over-year decline of 9.2% [3][4]. Market Dynamics - Strong demand for Zscaler's security and networking solutions is expected to drive its second-quarter results, particularly due to the growth in the global security space and the adoption of its Zero Trust Exchange platform [7]. - The rising adoption of Software-Defined Wide Area Network (SD-WAN) solutions is projected to be a primary driver, with the market size expected to reach $80.91 billion by 2034, growing at a CAGR of 31.6% from $5.36 billion in 2024 [8]. Product and Customer Retention - Zscaler's core products, including Zscaler Internet Access and Zscaler Private Access, have been instrumental in customer retention, with new features added to its Zero Trust Exchange aiding in product portfolio expansion and customer acquisition [9]. Investment and Expenses - The company has seen a year-over-year increase of 15.6% in non-GAAP sales and marketing expenses and 31.6% in non-GAAP research and development costs, which may impact profitability in the near term [11]. - Zscaler has significantly increased its R&D expenses to enhance its cloud platform, which, while beneficial in the long run, is currently affecting margins and profit growth [19]. Stock Performance and Valuation - Over the past year, Zscaler's shares have decreased by 8.4%, underperforming the Zacks Security industry's growth of 22.3% and peers in the cloud-based security space [12]. - Zscaler's stock is currently trading at a forward 12-month price-to-sales ratio of 10.24X, which is lower than the industry's 13.71X, indicating potential undervaluation [14]. Long-term Outlook - The company is well-positioned to benefit from the increasing demand for cybersecurity solutions driven by data breaches and digital transformation strategies [16]. - A strong presence across various verticals helps mitigate the impact of macroeconomic challenges, and recent acquisitions have contributed positively to its portfolio [17].