Core Insights - Zscaler's international operations are crucial for understanding its financial resilience and growth potential [1][2] - The company's total revenue for the quarter ending April 2025 was $678.03 million, reflecting a 22.6% increase year-over-year [4] International Revenue Analysis - Europe, Middle East, and Africa contributed $203.02 million, accounting for 29.94% of total revenue, surpassing the consensus estimate by 1.11% [5] - Asia Pacific generated $107.35 million, representing 15.83% of total revenue, exceeding expectations by 4.08% [6] - Other International regions brought in $24.67 million, making up 3.64% of total revenue, also surpassing projections by 2.82% [7] Future Revenue Projections - Analysts project total revenue for the current fiscal quarter to reach $707.18 million, a 19.3% increase from the same quarter last year [8] - Expected contributions from international markets include $211.52 million from Europe, Middle East, and Africa (29.9%), $109.91 million from Asia Pacific (15.5%), and $25.52 million from Other International (3.6%) [8] - For the full year, total revenue is anticipated to be $2.65 billion, marking a 22.2% increase compared to the previous year [9] Stock Performance Insights - Zscaler's stock has appreciated by 19.6% over the past four weeks, outperforming the Zacks S&P 500 composite, which increased by 6.1% [13] - Over the last three months, Zscaler's shares rose by 32.1%, while the S&P 500 experienced a decline of 0.5% [13]

Cloud stock Zscaler Inc (NASDAQ:ZS) was last seen up 7.6% at $270.32, after the company posted strong fiscal third-quarter results and raised its full-year forecast once again. Separately, the firm also announced the appointment of Kevin Rubin as the new Chief Financial Officer. The positive momentum has ZS brushing off a downgrade from Piper Sandler to "neutral" from "overweight," though no fewer than 18 analysts also lifted their price targets on the stock. Today's pop has ZS trading at three-year highs a ...

Core Insights - Zscaler reported strong third-quarter fiscal 2025 results, with non-GAAP earnings of 84 cents per share, exceeding the Zacks Consensus Estimate by 12% and reflecting an 18.3% year-over-year increase driven by revenue growth and cost management [1][3] - The company's revenues for the third quarter reached $678 million, surpassing the Zacks Consensus Estimate by 1.8% and management's guidance, marking a 23% year-over-year growth [2][3] - Following the positive results, Zscaler raised its fiscal 2025 guidance, which is expected to positively impact its stock performance [3] Financial Performance - Zscaler's calculated billings increased by 25% year over year to $784.5 million, with the Americas contributing 54% of revenues, EMEA 30%, and Asia Pacific and Japan 16% [4] - The non-GAAP gross profit rose by 20.8% year over year to $544.15 million, while the non-GAAP gross margin contracted by 100 basis points to 80% [7] - Total non-GAAP operating expenses accounted for 58.6% of revenues, increasing by 21% year over year to $397.5 million, resulting in a non-GAAP operating income of $146.7 million [7] Customer Metrics - Zscaler added multiple large customers across its offerings, achieving a net 12-month trailing dollar-based retention rate of 114% [5] - The company had 642 customers with annualized recurring revenues (ARR) of $1 million or more, and 3,363 customers with ARR exceeding $100,000 at the end of the third quarter [6] Balance Sheet and Cash Flow - As of April 30, 2025, Zscaler had $1.99 billion in cash and short-term investments, down from $2.88 billion as of January 31, 2025 [8] - The company generated operating cash flow of $211.1 million and free cash flow of $119.5 million during the third quarter [8] Updated Guidance - Zscaler revised its fiscal 2025 revenue forecast to a range of $2.659-$2.661 billion, up from $2.640-$2.654 billion, indicating a growth of 22.18% from fiscal 2024 [9] - The company expects calculated billings to be in the range of $3.184-$3.189 billion, an increase from the previous guidance [9] - Non-GAAP earnings per share for fiscal 2025 are now projected between $3.18 and $3.19, compared to the previous guidance of $3.04-$3.09 [10]

Core Insights - Zscaler Inc reported better-than-expected third-quarter financial results, with revenue of $678.03 million, surpassing the consensus estimate of $666.86 million and adjusted earnings of 84 cents per share, exceeding analyst estimates of 75 cents per share [1][2] Financial Performance - The company expects fourth-quarter revenue to be between $705 million and $707 million, slightly below the estimate of $707.61 million, with anticipated adjusted earnings of 79 to 80 cents per share [2] - Zscaler raised its full-year 2025 outlook, projecting revenue of $2.659 billion to $2.661 billion, compared to estimates of $2.65 billion, and adjusted earnings of $3.18 to $3.19 per share, exceeding estimates of $3.07 per share [3] Market Reaction - Following the earnings announcement, Zscaler shares fell by 1% to close at $251.11 [3] Analyst Ratings - Rosenblatt analyst Catharine Trebnick maintained a Buy rating on Zscaler and raised the price target from $235 to $315 [6] - Needham analyst Mike Cikos also maintained a Buy rating and increased the price target from $240 to $310 [6]

Core Insights - Zscaler reported revenue of $678.03 million for the quarter ended April 2025, marking a year-over-year increase of 22.6% [1] - The earnings per share (EPS) for the same period was $0.84, slightly down from $0.88 a year ago [1] - The reported revenue exceeded the Zacks Consensus Estimate of $666.39 million, resulting in a surprise of +1.75% [1] - The company achieved an EPS surprise of +12.00%, with the consensus EPS estimate being $0.75 [1] Financial Metrics - Billings for the quarter were $784.51 million, compared to the 10-analyst average estimate of $792.21 million [4] - Remaining Performance Obligations stood at $4.98 billion, surpassing the $4.73 billion average estimate based on three analysts [4] - The Dollar-Based Net Retention Rate was 114%, slightly below the two-analyst average estimate of 115% [4] - Revenue from Direct Customers was $80.14 million, exceeding the $76.85 million estimated by two analysts, representing a +57.6% change year-over-year [4] - Revenue from Channel Partners was $597.89 million, compared to the $589.01 million estimated by two analysts, reflecting a +19% change year-over-year [4] Stock Performance - Zscaler shares returned +12.2% over the past month, outperforming the Zacks S&P 500 composite's +6.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Zscaler (ZS) came out with quarterly earnings of $0.84 per share, beating the Zacks Consensus Estimate of $0.75 per share. This compares to earnings of $0.88 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 12%. A quarter ago, it was expected that this cloud-based information security provider would post earnings of $0.69 per share when it actually produced earnings of $0.78, delivering a surprise of 13.04%.Over the last four q ...

Financial Data and Key Metrics Changes - Revenue for Q3 was $678 million, representing a 23% year-over-year increase and a 5% sequential increase [30] - Annual recurring revenue (ARR) was approximately $2.9 billion, with a year-over-year growth of 23% [30] - Remaining performance obligations (RPO) grew 30% year-over-year to $4.978 billion [31] - Total calculated billings increased 25% year-over-year to $785 million [31] - Gross margin was 80.3%, down from 81.4% in the previous year [32] - Free cash flow margin was 18%, including data center CapEx at 11% of revenue [33] Business Line Data and Key Metrics Changes - New logo annual contract value (ACV) grew over 40% year-over-year [9] - Significant growth in three categories: Zero Trust Everywhere, Data Security Everywhere, and Agentic Operations, with combined ARR approaching $1 billion [19] - Zero Trust Everywhere customers increased from over 130 to over 210, reflecting over 60% quarter-over-quarter growth [22] Market Data and Key Metrics Changes - Americas represented 54% of revenue, EMEA 30%, and APJ 16% [30] - The macro environment remains cautious, with customers prioritizing cyber and data protection despite ongoing economic uncertainty [16] Company Strategy and Development Direction - The company aims to reach $5 billion or more in ARR, driven by the combination of Zero Trust and AI security [29] - The introduction of the Z Flex program allows customers to flexibly scale their adoption of the platform, contributing over $65 million in TCV bookings [17] - The acquisition of Red Canary is expected to enhance the company's capabilities in Managed Detection and Response (MDR) and Threat Intelligence [28] Management's Comments on Operating Environment and Future Outlook - Management noted that while the spending environment remains challenging, cybersecurity remains a priority for customers [51] - The company is focused on building strategic partnerships with customers to reduce costs and enhance ARR over time [52] - Management expressed confidence in achieving strong growth despite economic uncertainties, emphasizing the importance of Zero Trust architecture and AI security [52] Other Important Information - The company appointed Kevin Rubin as the new Chief Financial Officer, expected to contribute significantly to the next phase of growth [37][38] - The company plans to optimize new products for margins over time as they scale [34] Q&A Session Summary Question: How does the company ensure customer focus amidst rapid product expansion? - The company has implemented a two-tier sales model with specialized teams for new product areas, ensuring effective customer engagement and focus [44][45] Question: What is the outlook on macro trends affecting the business? - The company did not experience a softer April and continues to see strong demand for cybersecurity solutions, particularly in Zero Trust and AI security [51][52] Question: Can you elaborate on the Z Flex program and its impact? - The Z Flex program provides customers with flexibility in product adoption and has already generated significant TCV bookings [47][56] Question: What are the expectations for the federal business? - The federal business is performing in line with expectations, with potential for growth as customers seek to reduce costs associated with legacy security products [89][91] Question: How does the company view the acquisition of Red Canary? - The acquisition is seen as a strategic move to accelerate the company's vision in the security market, leveraging Red Canary's technology and expertise [64][66]

Financial Data and Key Metrics Changes - Revenue for Q3 was $678 million, representing a 23% year-over-year increase and a 5% sequential increase [29] - Annual recurring revenue (ARR) was approximately $2.9 billion, with a year-over-year growth of 23% [29] - Remaining performance obligations (RPO) grew 30% year-over-year to $4.978 billion [30] - Total calculated billings increased 25% year-over-year to $785 million [30] - Free cash flow margin was 18%, including data center CapEx at 11% of revenue [32] Business Line Data and Key Metrics Changes - New logo annual contract value (ACV) grew over 40% year-over-year [7] - Zero Trust Everywhere, Data Security Everywhere, and AgenTic Operations are significant growth drivers, with combined ARR approaching $1 billion [18] - ZDX CoPilot bookings grew over 70% year-over-year to nearly $75 million [24] - SecOps solutions saw over 120% year-over-year growth in ACV [26] Market Data and Key Metrics Changes - Americas represented 54% of revenue, EMEA was 30%, and APJ was 16% [29] - The dollar-based net retention rate was 114% [31] Company Strategy and Development Direction - The company aims to reach $5 billion or more in ARR, focusing on Zero Trust and AI security [28] - The Z Flex program allows customers to flexibly scale their adoption of the platform, contributing over $65 million in TCV bookings [16] - The acquisition of Red Canary is expected to enhance capabilities in Managed Detection and Response (MDR) and Threat Intelligence [26][66] Management's Comments on Operating Environment and Future Outlook - Customers remain cautious about IT spending due to economic uncertainty, but prioritize cyber and data protection [15] - The company is seeing strong demand for its platform despite macroeconomic challenges [50] - Management is optimistic about the growth potential in federal business, although it is not a significant revenue contributor currently [88] Other Important Information - The company appointed Kevin Rubin as the new Chief Financial Officer [36] - The acquisition of Red Canary is valued at $675 million and is expected to close in August 2025 [66] Q&A Session Summary Question: How does the company ensure customer focus amidst rapid product expansion? - The company has implemented a two-tier sales model with takeoff teams for new product areas, allowing for focused expertise [43][44] Question: What is the outlook on macro trends affecting the business? - The spending environment remains challenging, but cybersecurity projects are prioritized, especially those involving Zero Trust and AI [50][51] Question: Can you elaborate on the Z Flex program? - Z Flex provides customers with flexibility in purchasing and deploying modules without lengthy procurement cycles, starting with larger customers [46][47] Question: What are the growth drivers in the new product categories? - The company is seeing significant growth in Zero Trust Everywhere, Data Security Everywhere, and AgenTic Operations, with impressive growth rates in each category [18][94] Question: What attracted the company to acquire Red Canary? - The acquisition was driven by the need to accelerate the vision of becoming a leading player in the security market, leveraging Red Canary's technology and expertise [64][66]

Q3 2025 Financial Performance - Revenue for Q3 2025 reached $678 million, exceeding guidance, representing a 23% year-over-year increase[6] - Calculated billings for Q3 2025 totaled $785 million, exceeding expectations with a 600 bps Q/Q increase[6] - Calculated Current Billings reached $760 million, a 24% year-over-year increase[6] - The company achieved a gross margin of 80.3% and an operating margin of 21.6%[6] - EPS for Q3 2025 was $0.84, an 18% year-over-year increase[6] - Free cash flow was $119 million, representing an 18% margin[6] Key Business Metrics and Growth - Remaining Performance Obligations (RPO) reached approximately $5 billion, with a 30% year-over-year growth[8] - Annual Recurring Revenue (ARR) reached approximately $2.9 billion, with a 23% year-over-year growth[8] - TCV Bookings exceeded $1 billion, marking a Q3 record[8] - New growth categories ARR is growing faster than total ARR, approaching $1 billion in combined ARR[8, 30] Strategic Initiatives and Customer Adoption - Over 210 enterprises are adopting "Zero Trust Everywhere," with a growth rate exceeding 60% quarter-over-quarter[8] - 59% of customers purchasing Zero Trust Branch were new logos[8] - Zscaler secured over 50 million total users on its platform[15] FY25 Guidance - The company increased its FY25 revenue guidance to $2.659 billion - $2.661 billion, representing approximately 23% year-over-year growth[59] - Calculated billings guidance for FY25 was increased to $3.184 billion - $3.189 billion, representing 21%-22% year-over-year growth[59] - Operating profit guidance for FY25 was increased to $573 million - $575 million, with an approximate 22% margin[59] - Earnings per share guidance for FY25 was increased to $3.18 - $3.19[59] - Free Cash Flow Margin guidance for FY25 was increased to 25.5%-26.0%[59]

Revenue Growth - For the nine months ended April 30, 2025, revenue was $1,953.9 million, a 24% increase from $1,574.9 million in the same period of 2024[119] - Revenue for the three months ended April 30, 2025, was $678,034,000, up from $553,201,000 in the same period of 2024, marking a growth of 22.6%[143] - Revenue increased by $378.986 million, or 24%, for the nine months ended April 30, 2025, compared to the same period in 2024, driven by a 10% increase in the customer base and additional subscriptions contributing $294.8 million[179] Customer Base Expansion - As of July 31, 2024, the company had over 8,650 customers, up from over 7,700 customers in 2023, representing a growth of approximately 12.3%[122] - The company is focused on expanding its customer base, particularly among the Forbes Global 2000, where it currently serves approximately 35%[122] - The company increased its customer base by 10% from April 30, 2024, to April 30, 2025, contributing to revenue growth[163] Financial Performance - GAAP gross profit for the nine months ended April 30, 2025, was $1,507.951 million, compared to $1,227.979 million for the same period in 2024, reflecting a growth of 22.8%[136] - The company incurred a net loss of $23.9 million for the nine months ended April 30, 2025, an improvement from a net loss of $42.8 million in the same period of 2024[119] - Net loss for the three months ended April 30, 2025, was $(4.1) million compared to a net income of $19.1 million for the same period in 2024[161] Cash Flow and Liquidity - Free cash flow for the period is calculated as net cash provided by operating activities less capital expenditures, indicating liquidity for strategic initiatives[139] - Net cash provided by operating activities for the nine months ended April 30, 2025, was $721.8 million, compared to $576.3 million for the same period in 2024, reflecting an increase of 25.2%[201][203] - As of April 30, 2025, the company had cash, cash equivalents, and short-term investments totaling $3,005.6 million, available for working capital and general corporate purposes[194] Operating Expenses - Operating expenses are expected to increase in absolute dollars as the company invests in sales and marketing, research and development, and general and administrative functions[153][154][155] - Sales and marketing expenses rose by $52.2 million or 20% to $314.6 million for the three months ended April 30, 2025, driven by higher employee-related costs[166] - Research and development expenses increased by $134.201 million, or 37%, for the nine months ended April 30, 2025, primarily due to higher employee-related expenses and costs associated with facility and software[184] Deferred Revenue - Total deferred revenue at the end of the period for April 30, 2025, was $1,984,985,000, compared to $1,577,014,000 at the end of the same period in 2024[143] - As of April 30, 2025, the company had deferred revenue of $1,985.0 million, with $1,677.9 million expected to be recognized as revenue in the next 12 months[199] - The company strategically entered into multi-year advance billing agreements, significantly contributing to its deferred revenue[199] Market Risks - The company’s investments are exposed to market risk, with a hypothetical 100 basis point change in interest rates potentially affecting the fair value of investments by $9.6 million[212] - The company has a foreign currency risk management program, utilizing forward contracts to hedge forecasted foreign currency-denominated expenses[218] Future Outlook - The company expects to continue incurring net losses in the foreseeable future due to ongoing investments in sales, marketing, and research and development[119] - The company anticipates that gross profit will increase in absolute dollars and gross margin will slightly improve over the long term[150] - The company expects calculated billings growth rate to trend down over time due to seasonality and the mix of billings[142]