Zscaler on Thursday reported fiscal second-quarter earnings and revenue that topped Wall Street targets for ZS stock. The cybersecurity firm's guidance edged by expectations.
Reported after the market close, Zscaler earnings rose 105% to 76 cents a share from a year earlier on an adjusted basis. Revenue climbed 35% to $525 million, the San Jose, Calif.-based firm said.
ZS stock analysts expected earnings of 58 cents per share on sales of $507.6 million.
Also, billings rose 27% to $627.6 million, compared with estimates for $610.5 million.
But despite the upbeat results, some analysts flagged what appeared to be worrisome trends. Barclays and Cantor Fitzgerald lowered their price targets for Zscaler stock, according to TheFly.com. A Barclays analyst said the company's 2024 guidance "is Q4-weighted, which implies the business is becoming more big deal driven."
However, other analysts were upbeat about Zscaler stock. Wedbush analyst Daniel Ives said Zscaler delivered "an impressive quarter," telling clients in a note, "we continue to believe ZS is a top name in this space to own as this cloud cyber security shift accelerates over the next decade."
ZS Stock: Fiscal Q3 Guidance
For the current quarter ending in April, Zscaler said it expects earnings per share in the range of 64 cents to 65 cents, ahead of estimates for 58 cents.
Zscaler said it expects revenue of $535 million at the midpoint of guidance. Analysts had predicted revenue of $532 million. The company forecast operating income of $99 million at the midpoint of guidance vs. consensus estimates of $85 million.
On the stock market today, ZS stock fell more than 6% to 225.30 in extended trading.
Heading into the Zscaler earnings release, the cybersecurity stock had gained 7% in 2024 and 81% over the past year. Also, ZS stock had a Relative Strength Rating of 94 out of a best-possible 99, according to IBD Stock Checkup.
Zscaler provides cloud-based cybersecurity services via 150 data centers worldwide. Zscaler's web security gateways inspect customers' data traffic for malware.
Further, the Zscaler Private Access (or ZPA) cloud service replaces virtual private networks to support remote work.
Zscaler competes with Palo Alto Networks and Microsoft.
Follow Reinhardt Krause on X, formerly called Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
