Zscaler stock tumbled Tuesday after the cybersecurity firm reported fiscal first-quarter earnings, revenue and billings that beat estimates. But Zscaler's in-line revenue guidance underwhelmed investors.
Meanwhile, Chief Financial Officer Remo Canessa announced he plans to retire. He has served as the company's CFO since 2017. Canessa will remain CFO until the company appoints a successor. A search is currently underway, Zscaler told Wall Street analysts.
"This remains a complicated story where a new CFO will presumably inherit guidance that implies billings need to accelerate from 13% year-over-year growth to 23% in the second half of fiscal year," said Raymond James analyst Adam Tindle in a report.
Reported after the market close on Monday, Zscaler earnings rose 36% to 77 cents a share from a year earlier on an adjusted basis. Revenue climbed 26% to $628 million, the San Jose, Calif.-based firm said.
Zscaler stock analysts expected earnings of 63 cents per share on sales of $606 million.
Also, fiscal Q1 billings rose 13% to $516.7 million. "Fiscal Q1 billings grew 13% versus consensus at 10% but missed the buy-side investor bogey of mid-teens growth," said Jefferies analyst Joseph Gallo in a report.
Zscaler Stock: Guidance Disappoints
For the current quarter, Zscaler said it expects revenue of $634 million at the midpoint of guidance, versus estimates of $633 million.
On the stock market today, Zscaler stock fell 7.7% to 192.40 in early trading.
Zscaler has brought in a new chief revenue officer, chief marketing officer and other top sales staff as its go-to-market strategy undergoes big changes. Analysts have lowered consensus estimates amid the sales organization overhaul.
Heading into the Zscaler earnings release, the cybersecurity stock had retreated 6% in 2024. Also, ZS stock had a Relative Strength Rating of 50 out of a best-possible 99, according to IBD Stock Checkup.
Zscaler Stock Technical Ratings
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 cloud service replaces virtual private networks to support remote work.
Zscaler competes with Palo Alto Networks and Microsoft as well as well-funded startup Wiz.
Meanwhile, Zscaler stock belongs to the IBD Computer-Software Security group, which ranks No. 77 out of 197 groups tracked.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
