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]

Core Insights - Zscaler reported strong financial results for Q3 FY2025, driven by increased adoption of its Zero Trust Exchange platform and growing demand for AI security solutions [2][3][6] Financial Highlights - Revenue reached $678.0 million, a 23% increase year-over-year [6][7] - Calculated billings grew 25% year-over-year to $784.5 million [6] - Deferred revenue increased by 26% year-over-year to $1,985.0 million [6] - GAAP net loss was $4.1 million, compared to a GAAP net income of $19.1 million in the same quarter last year [6][7] - Non-GAAP net income rose to $136.8 million from $113.0 million year-over-year [6][7] - Cash provided by operations was $211.1 million, maintaining a 31% margin [7][42] Business Developments - The company appointed Kevin Rubin as Chief Financial Officer and Raj Judge to the Board of Directors [6] - Zscaler signed an agreement to acquire Red Canary, enhancing its AI-powered security operations [6] - Recognized as a Leader in the 2025 Gartner Magic Quadrant for Security Service Edge for the fourth consecutive year [6] - Introduced Zscaler Asset Exposure Management, part of its Continuous Threat Exposure Management offerings [6] Market Trends - The 2025 AI Security Report indicated a 3,000% increase in enterprise usage of AI/ML tools, highlighting the need for Zero Trust strategies [11] - The 2025 VPN Risk Report revealed that 92% of organizations are concerned about ransomware attacks due to VPN vulnerabilities [11] - The 2025 Phishing Report noted that attackers are leveraging GenAI for targeted attacks, emphasizing the importance of a Zero Trust + AI defense strategy [11]

Core Insights - Zscaler has announced a definitive agreement to acquire Red Canary, enhancing its capabilities in Managed Detection and Response (MDR) and threat intelligence [1][2] - The acquisition aims to integrate Zscaler's AI-driven workflows with Red Canary's expertise, creating a unified Security Operations Center (SOC) [1][3] - Zscaler protects nearly 45% of Fortune 500 organizations and processes over 500 billion daily transactions, establishing itself as a leader in cloud security [2][4] Company Overview - Zscaler operates the world's largest cloud security platform, leveraging a massive data lake to develop advanced AI-driven solutions [2][4] - Red Canary has over 10 years of experience in security operations, recognized as a leader in the Forrester Wave™ for MDR for three consecutive years [2][4] - The integration of both companies is expected to enhance threat detection and response capabilities, addressing common operator pain points [3][4] Strategic Goals - The acquisition is seen as a natural expansion of Zscaler's capabilities, aiming to accelerate the vision of an AI-powered SOC of the future [2][3] - By combining resources, the companies aim to improve the speed and efficiency of threat detection and response, helping organizations tackle modern security challenges [3][4] - The transaction is subject to customary closing conditions and is expected to close in August 2025 [4]

Core Viewpoint - Zscaler, Inc. will host an innovations briefing for investors on June 3, 2025, during its Zenith Live 2025 event in Las Vegas, Nevada [1][2]. Group 1: Event Details - The innovations briefing is scheduled to start at 11:30 a.m. PT and conclude before 2:00 p.m. PT [2]. - A live webcast and replay of the briefing will be available on the Investor Relations section of the Zscaler website [2]. Group 2: Company Overview - Zscaler is a leader in cloud security, focusing on accelerating digital transformation for customers to enhance agility, efficiency, resilience, and security [3]. - The Zscaler Zero Trust Exchange™ platform protects thousands of customers from cyberattacks and data loss by securely connecting users, devices, and applications globally [3]. - The platform is distributed across more than 150 data centers worldwide, making it the largest in-line cloud security platform based on SASE [3].

Core Insights - Zscaler has been recognized as a leader in the "2025 Security Service Edge Magic Quadrant" by Gartner, achieving the highest position on the 'Ability to Execute' axis for the fourth consecutive year [1][3] Company Overview - Zscaler, Inc. (NASDAQ: ZS) specializes in cloud security and aims to enhance digital transformation for its customers by providing a secure connection for users, devices, and applications globally [6] - The company operates the world's largest in-line cloud security platform, the Zscaler Zero Trust Exchange™, distributed across more than 150 data centers [6] Industry Trends - The Security Service Edge (SSE) market is driven by factors such as VPN replacement, Zero Trust networking, SaaS adoption, and GenAI security [2] - Gartner estimates that SaaS will be the largest cloud revenue generator, with a compound annual growth rate of over 15% through 2028 [2]

Core Insights - Zscaler, Inc. has appointed Raj Judge as Executive Vice President of Corporate Strategy and Ventures, aiming to drive the company's growth strategy towards achieving $5 billion in Annual Recurring Revenue (ARR) and beyond [1][3] Company Overview - Zscaler is a leader in cloud security, providing a Zero Trust Exchange that protects thousands of customers from cyberattacks and data loss by securely connecting users, devices, and applications globally [5] Leadership Appointment - Raj Judge brings over 25 years of experience in the tech legal and venture capital sectors, having previously served as Senior Partner and Co-Chair at Wilson Sonsini [2] - Judge's expertise in corporate strategy and investment is expected to significantly impact Zscaler's growth and innovation agenda [3] - The appointment reflects Zscaler's commitment to advancing its corporate strategy and long-term vision [3] Strategic Goals - Judge will focus on key growth and investment opportunities, working closely with stakeholders to accelerate innovation and broaden Zscaler's platform for its customers [3][4]

Zscaler (NASDAQ: ZS ) continues to gain momentum as one of the leading cloud native cybersecurity providers in the world. They currently leverage a Zero Trust architecture that helps enterprises secure users, apps, and systems across increasingly complex IT environments. The company'sHello and welcome to my Seeking Alpha page. My name is Jack Elias, and I am a dedicated business student with a fervent passion for the world of investing. With a solid foundation in both theoretical knowledge and practical exp ...

Core Insights - Varonis Systems, Inc. has achieved Federal Risk and Authorization Management Program (FedRAMP®) Authorization for its cloud-native Data Security Platform, marking it as the first in its category to do so [1][3] - The certification confirms that Varonis' AI-driven platform meets stringent standards for cloud security solutions, emphasizing the company's dedication to providing top-tier data security for federal and public-sector organizations [2][3] Company Overview - Varonis is recognized as a leader in data security, focusing on a different approach compared to traditional cybersecurity firms, with its platform continuously discovering and classifying critical data, removing exposures, and detecting advanced threats through AI automation [6][7] - The platform supports various security outcomes, including data security posture management (DSPM), data classification, data access governance (DAG), data detection and response (DDR), data loss prevention (DLP), AI security, and insider risk management [7] Industry Impact - The FedRAMP certification positions Varonis as a preferred choice for organizations needing to enhance their security measures, particularly in the context of Zero Trust, insider threat detection, and compliance with federal mandates [3][4] - Public-sector entities can now expedite their data security initiatives and prepare for secure AI implementations by adopting Varonis' platform [4]

Core Viewpoint - Cybersecurity providers are expected to remain resilient amid market volatility caused by tariffs, as cybercriminal activities continue unabated. Investors are encouraged to consider four leading cybersecurity stocks this month [1]. Group 1: Palo Alto Networks - Palo Alto Networks is transitioning from a next-generation firewall provider to a comprehensive cybersecurity platform, implementing a "platformization" strategy to consolidate customers onto three main platforms [3]. - The strategy has resulted in 1,150 of its top 5,000 customers adopting one of its platforms, with a target of 2,500 to 3,500 by fiscal year 2030. Growth is also seen in its Cortex threat detection and response solution and Prisma Cloud [4]. - Although the platformization strategy temporarily slowed growth, it is expected to yield long-term benefits for investors [5]. Group 2: CrowdStrike - CrowdStrike is positioned to benefit from companies consolidating their cybersecurity needs onto a single platform, being a leader in endpoint security [6]. - The company offers a comprehensive suite of cybersecurity solutions, with 67% of customers deploying five or more modules and 21% using eight or more [8]. - With the impact of a previous IT outage behind it, CrowdStrike is expected to see growth accelerate, making it an attractive investment opportunity [9]. Group 3: Zscaler - Zscaler is a leader in zero-trust security, emphasizing continuous verification of users and devices for secure access [10]. - The company has successfully upsold its zero-trust systems and reported a 40% increase in annual contract value for its data security products, with overall revenue growing 23% year over year [12]. - Zscaler's strong net dollar retention rate of 115% indicates robust growth within its existing customer base, positioning it well for future success [12]. Group 4: SentinelOne - SentinelOne is a rapidly growing endpoint cybersecurity company with a low forward price-to-sales multiple of 6.6, despite achieving 29% revenue growth last quarter [13]. - The partnership with Lenovo, the world's largest enterprise PC vendor, to ship computers with SentinelOne's Singularity Platform is a significant opportunity [14]. - The company is also successfully upselling its Purple AI, which enhances security operations through hyper-automation, indicating a promising future [15][16].

Core Viewpoint - Palo Alto Networks is expected to report strong fiscal third-quarter results with projected revenues of $2.26-$2.29 billion, indicating a year-over-year growth of 14-15% [1][8] Revenue and Earnings Projections - The Zacks Consensus Estimate for fiscal third-quarter revenues is $2.27 billion, reflecting a growth of 14.6% from the previous year [1] - Non-GAAP earnings are projected to be 77 cents, representing a 16.7% increase from the same quarter last year [2] Performance History - Palo Alto Networks has consistently beaten the Zacks Consensus Estimate in the last four quarters, with an average surprise of 5.5% [5] Factors Influencing Q3 Results - The company is likely to benefit from strong deal wins and increased demand for its machine learning-powered security models [8] - The accelerated migration to cloud platforms and rising cyberattacks due to hybrid work environments are expected to drive demand for cybersecurity solutions [9] - FedRAMP recognitions for several products are enhancing adoption among government organizations [10] Challenges and Risks - The company faces challenges related to the transition from hardware to software and cloud-based solutions, which may impact gross margins [11] - There are concerns about softening IT spending due to macroeconomic uncertainties, which could affect revenue growth [15] - Increased competition from established players like CrowdStrike and Zscaler necessitates continuous investment in capabilities [18][19] Stock Performance and Valuation - Over the past year, Palo Alto Networks' shares have increased by 21.8%, underperforming the Zacks Internet – Software industry's return of 31.8% [12] - The company is trading at a forward 12-month P/S of 12.52X, which is lower than the industry's 14.04X, indicating a fair valuation [13] Investment Consideration - The company's innovative product offerings and expanding market opportunities in areas like Zero Trust and private 5G security solutions present growth potential [14] - Despite near-term challenges, the long-term outlook remains positive, making the stock worth holding [21]