Shares of Zscaler, Inc. (NASDAQ:ZS) are trading lower Wednesday after the cloud security company reported first-quarter earnings results.
- ZS is taking a hit from negative sentiment. See the complete data here.
What To Know: Zscaler reported revenue of $788.1 million in revenue, beating estimates of $773.75 million. That number was up 26% from the same period last year. The company also reported annual recurring revenue of $3.204 billion.
Zscaler reported adjusted earnings of 96 cents per share for the period, beating estimates of 86 cents per share.
Zscaler highlighted its recent acquisition of AI security company SPLX, which will add to the company’s Zero Trust Exchange platform capabilities like shift-left AI asset discovery and automated red teaming. The company also said it surpassed $1 billion in software sales through the AWS Marketplace and launched data centers in London and Paris.
“Our outstanding Q1 results demonstrate the strong demand we are experiencing for our Zero Trust and AI Security platform. With over $3.2B in Annual Recurring Revenue, growing over 25% year-over-year, and Rule-of-78 performance, I’m very pleased to share that an increasing number of customers are relying on our platform for better security, lower operational costs and reduced IT complexity,” said Jay Chaudhry, CEO of Zscaler.
For the second quarter, Zscaler expects revenue between $797 million to $799 million and adjusted earnings of 89 to 90 cents per share, versus estimates of 89 cents per share.
In terms of a full-year outlook, Zscaler expects annual recurring revenue to land between $3.698 billion and $3.718 billion. The company raised guidance for revenue to a range of $3.282 billion on the low end and $3.301 billion on the high end.
Multiple analysts lowered price targets on Zscaler following the print, which may be weighing on shares Wednesday.
- Scotiabank analyst Patrick Colville maintained a Sector Outperform and lowered the price target from $334 to $320.
- UBS analyst Roger Boyd maintained a Buy and lowered the price target from $350 to $340.
- Stifel analyst Adam Borg maintained a Buy and lowered the price target from $330 to $320.
- BofA Securities analyst Tal Liani maintained a Buy and lowered the price target from $355 to $335.
- Needham analyst Mike Cikos maintained a Buy and lowered the price target from $350 to $310.
Meanwhile, JPMorgan and Bernstein analysts raised price targets to $354 and $264, respectively.
ZS Price Action: Shares of Zscaler were down 9.71%, trading at $261.60 at publication time, according to Benzinga Pro.
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