Zscaler Shares Gain After 'Very Good' Results

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Zscaler Shares Gain After 'Very Good' Results
Credit: © Reuters.

By Senad Karaahmetovic

Shares of Zscaler (NASDAQ: ZS ) are up almost 4% in premarket trading Friday after the software maker reported stronger-than-expected Q3 financial results.

ZS reported Q3 adjusted EPS of 17c, compared to 15c in the year-ago period and above the analyst consensus of 11c per share. The company nabbed $286.8 million in revenue, up 63% YoY, topping the consensus projection of $271.7 million.

For this quarter, ZS expects adjusted EPS in the range of 20c to 21c, also above the analyst expectations of 17c per share. The company forecasts Q4 revenue in the range of $304 million to $306 million, while analysts were looking for $292 million.

For the full fiscal year, ZS expects adjusted EPS in the range of 64c to 65c, up from its previous forecast of 54c to 56c, and beating the estimates of 55c per share. ZS expects FY revenue of about $1.08 billion, up from $1.05 billion, and above the estimated $1.05 billion.

The cloud security software maker expects FY calculated billings of about $1.43 billion, up from the previous guidance of $1.37 billion. Analysts were also expecting $1.37 billion.

“As a result of increasing demand, we are also raising our fiscal year guidance on all financial metrics,” said Jay Chaudhry, Chairman and CEO of Zscaler.

“Enterprises continue to consolidate point products in favor of our integrated Zero Trust security platform, resulting in larger, multi-year commitments to Zscaler.”

Credit Suisse (SIX: CSGN ) analyst Phil Winslow cut the price target to $310.00 per share from $410.00 after “strong” results.

“These results reinforce our thesis that Zscaler, as the flagbearer of cloud security with a differentiated architecture, is uniquely positioned to help drive transformational change toward Zero Trust security architectures, which will enable Zscaler to deliver more sustainable growth than consensus expects,” Winslow told clients in a note.

Similarly, Mizuho’s Gregg Moskowitz saw “very good” results.

“We remain confident that ZS is extremely well positioned for growth, and that its unique cloud proxy security architecture should enable it to thrive in an increasingly digital-enabled world. We also continue to expect significant improvements in monetization, particularly as newer offerings (ZDX/ZCP) gain further traction,” Moskowitz wrote in a client note.

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