Group 1 - The focus is on identifying small cap companies with strong fundamentals and growth potential, large cap companies experiencing temporary setbacks, and stable companies with solid dividend yields and growth potential [1] - The analyst has a strong quantitative background with a Ph.D. in Chemical Engineering and an MBA, indicating a robust foundation for conducting market research [1] Group 2 - The article expresses the author's own opinions and indicates a beneficial long position in the shares of ZS, suggesting a positive outlook on this particular stock [2] - There is no compensation received for the article other than from Seeking Alpha, which may imply an independent analysis [2] Group 3 - Seeking Alpha clarifies that past performance does not guarantee future results, emphasizing the importance of conducting individual research before making investment decisions [3] - The platform does not provide recommendations or advice on investment suitability, highlighting the need for investors to assess their own situations [3]

Core Insights - Zscaler has experienced a significant decline of over 20% following its second quarter fiscal year 2024 earnings report released on February 29, 2024, indicating investor discomfort with the challenges the company is facing [1] Company Summary - The company operates in the technology sector, specifically focusing on cybersecurity solutions [1] - The recent earnings report has raised concerns among investors, leading to a prolonged decline in stock performance [1] Industry Context - The technology industry, particularly cybersecurity, is facing headwinds that may impact company performance and investor sentiment [1]

Core Viewpoint - Zscaler, Inc. is set to release its second quarter fiscal year 2025 earnings on March 5, 2025, after market close, followed by an investor conference call to discuss the results [1]. Group 1: Earnings Release Details - The earnings report will be available after the market closes on March 5, 2025 [1]. - An investor conference call is scheduled for 1:30 p.m. Pacific time (4:30 p.m. Eastern time) on the same day [1]. - Participants can join the call via a provided dial-in number after registration [2]. Group 2: Conference Call Participation - It is recommended to dial in at least 10 minutes prior to the start time of the conference call [3]. - A live webcast of the conference call will be accessible on the Zscaler website under the "Events & Presentations" section [3]. Group 3: Company Overview - Zscaler is a leader in cloud security, facilitating digital transformation for customers to enhance agility, efficiency, resilience, and security [4]. - The Zscaler Zero Trust Exchange™ platform protects thousands of customers from cyberattacks and data loss by securely connecting users, devices, and applications globally [4]. - The platform is distributed across more than 150 data centers worldwide, making it the largest in-line cloud security platform [4].

Core Viewpoint - Zscaler, Inc. has seen a 21.9% decline in stock price over the past year, underperforming against major indices and competitors, but this presents a unique investment opportunity due to its strong fundamentals and market potential [1] Group 1: Market Performance and Challenges - Zscaler's stock decline is attributed to macroeconomic factors such as inflation, high interest rates, and cautious enterprise IT spending, along with increased competition and high historical valuations [3] - Despite these challenges, Zscaler's long-term growth potential remains intact, particularly in the Zero Trust cybersecurity market, which is expected to grow at a CAGR of over 16.7% through 2032 [6][7] Group 2: Financial Performance - In Q1 of fiscal 2025, Zscaler reported a 26% year-over-year revenue increase to $628 million, with emerging products growing at double the rate of core offerings [9] - The company achieved a record operating margin of 21% and non-GAAP earnings growth of 40%, reaching 77 cents per share [9] Group 3: Customer Base and Market Positioning - Zscaler's customer base includes 585 clients generating over $1 million in annual recurring revenues, with significant representation from Fortune 500 and Global 2000 companies [10] - Approximately 45% of Fortune 500 companies and over 35% of Global 2000 companies utilize Zscaler's solutions, with a net dollar retention rate of 114% indicating strong customer loyalty [10] Group 4: Future Growth Prospects - Zscaler is well-positioned to benefit from the migration to cloud environments, increased adoption of AI-driven cybersecurity, and a recovery in IT spending [11] - The Zacks Consensus Estimate indicates strong double-digit revenue growth for fiscal years 2025 and 2026, with projected revenues of $2.64 billion and $3.15 billion respectively [12]

Core Insights - Zscaler has integrated its Zero Trust Network Access (ZTNA) service, Zscaler Private Access (ZPA), within RISE with SAP to enhance secure cloud access for customers [1][3] - The integration aims to simplify and de-risk cloud migration for SAP customers, moving away from traditional VPNs and firewalls [1][6] Security Landscape - According to Zscaler's 2024 VPN Risk report, 56% of organizations experienced cyberattacks targeting VPN vulnerabilities in the past year, highlighting the need for a shift to Zero Trust architecture [2] - The ZPA solution provides secure access to critical ERP infrastructure, supporting compliance and performance regardless of the location of the workforce, applications, or data [2][4] Customer Benefits - Businesses utilizing RISE with SAP can leverage ZPA for improved security, agility, and compliance, eliminating the complexities associated with traditional security measures [3][6] - ZPA enables seamless Zero Trust connectivity for SAP S/4HANA Cloud applications across various deployment models, including multi-cloud and hybrid cloud environments [3][6] Industry Perspectives - Executives from various companies, including Volkswagen AG and Siemens AG, have expressed that the ZPA integration significantly enhances the security and reliability of SAP applications, supporting their digital transformation efforts [5][7] - The solution allows organizations to maintain a robust security posture while enabling flexible and scalable access to SAP resources [5][7] Event and Further Information - An exclusive virtual event featuring leaders from SAP, Siemens, Volkswagen, Deutsche Börse, Deloitte, Accenture, and Capgemini will discuss the partnership and its implications in detail [7] - For more information on the Zscaler and SAP integration, additional resources are available on Zscaler's website [8]

Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Zscaler (ZS) .Zscaler currently has an average brokerage recommendation (A ...

Zscaler (ZS) could be a solid choice for investors given its recent upgrade to a Zacks Rank #2 (Buy). This rating change essentially reflects an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate.Individual investors often find it ...

Market Performance and Valuations - The stock market has delivered back-to-back gains of over 20% in the past two years, leading to stretched valuations and investor nervousness near all-time market highs [1] - The priority for the year is to rotate more of the portfolio, indicating a strategic shift in investment focus [1] Analyst Background and Industry Exposure - Gary Alexander has combined experience covering technology companies on Wall Street and working in Silicon Valley, providing deep industry insights [1] - He serves as an outside adviser to several seed-round startups, giving him exposure to emerging industry themes [1] - His contributions on Seeking Alpha since 2017 and syndication to platforms like Robinhood highlight his influence in the investment community [1]

Core Insights - Zscaler partners with Nokia to deploy the Zscaler Zero Trust Exchange platform, enhancing Nokia's security, operational efficiency, and cloud capabilities [1][8] - The Zscaler platform is a cloud-native security solution that reduces the attack surface by connecting users directly to applications without exposing the corporate network [2][4] Legacy Challenges - Nokia previously used traditional hardware and virtual firewalls, which complicated uniform security control across various locations and platforms [3] - The shift to a cloud-first model necessitated a more agile security architecture capable of supporting Nokia's evolving needs [3] Future-Focused Approach - Zscaler's platform offers extensive public edge coverage and an application-centric approach to zero-trust security, with over 160 globally distributed data centers [4][13] - Key components of the deployment include Zscaler Internet Access, Zscaler Private Access, Zscaler Digital Experience, and Zscaler Data Protection [5] Transformative Benefits - Nokia anticipates significant operational and security benefits from the phased implementation of the Zscaler platform, allowing for scalability and rapid adaptation [6][7] - Initial rollout phases have already shown improved end-user connectivity and productivity [7]

Core Viewpoint - Zscaler's stock has declined approximately 10% in 2024 despite reporting solid revenue growth and increasing guidance, raising questions about the justification for the price dip and potential buying opportunities [1][2]. Financial Performance - For the fiscal first quarter ended October 31, Zscaler reported a revenue increase of 26% year over year, reaching $628 million, surpassing the previous guidance of $604 million to $606 million [3]. - Adjusted earnings per share (EPS) rose to $0.77 from $0.55 a year ago, exceeding the forecasted range of $0.62 to $0.63 [5]. - The company generated operating cash flow of $331.3 million and free cash flow of $291.9 million, ending the period with $2.7 billion in cash and short-term investments, alongside $1.15 billion in debt [6]. Growth Metrics - Calculated billings growth was only 13% year over year, totaling $516.7 million, which disappointed investors, although deferred revenue increased by 27% to $1.78 billion [4]. - Zscaler maintained a dollar-based net retention rate of 114%, indicating strong growth within its existing customer base [7]. Guidance and Forecast - Zscaler raised its full-year revenue guidance to a range of $2.623 billion to $2.643 billion, up from $2.6 billion to $2.62 billion, and adjusted EPS guidance to $2.94 to $2.99 from $2.81 to $2.87 [8][9]. - For fiscal Q2, the company forecasts revenue between $633 million and $635 million, with adjusted EPS between $0.68 and $0.69, aligning with analyst expectations [11]. Market Position and Strategy - The company is experiencing strong upsells, particularly in its Zscaler Private Access (ZPA) business, and is seeing traction in emerging solutions like Zscaler Digital Experience (ZDX) and AI analytics [7][13]. - Zscaler is focusing on new AI solutions and has secured a deal to protect Microsoft Copilot data, indicating potential growth in data security [13]. Valuation - Zscaler trades at a forward price-to-sales multiple of approximately 9.6, which is considered attractive given its revenue growth rate exceeding 25% [14].