Zscaler Surpasses Earnings, Revenue, and Billings Expectations, Stock Surges
Zscaler (ZS) has reported impressive fiscal third-quarter results that exceeded Wall Street’s expectations, leading to a surge in the cybersecurity firm’s stock. Amid lowered expectations, Zscaler’s earnings, revenue, and billings have all shown significant growth.
Reported after the market close on Thursday, Zscaler’s earnings rose by 83% to 88 cents per share on an adjusted basis compared to the previous year. The company’s revenue also saw a notable increase, climbing by 32% to $553.2 million.
Zscaler stock analysts had predicted earnings of 66 cents per share on sales of $536 million, but the company outperformed these estimates. Billings for the quarter rose by 30% to $628 million, surpassing the projected $583.7 million.
Analyst Shaul Eyal from TD Cowen noted, “While the sales momentum was particularly driven by continued demand for the Zero Trust Exchange platform, we expect demand to remain strong over the next months. Zscaler is seeing rising customer interest for its emerging products and continued traction in the federal government.”
Looking ahead, Zscaler expects revenue of $566 million for the current quarter, meeting expectations. BMO Capital Markets analyst Keith Bachman commented, “We are impressed with growing revenue diversification, which we think will help support durable growth through upsell, cross-sell, and larger lands (deals).”
Following the earnings release, Zscaler stock surged by 11.9% to $175.31 in morning trading. The cybersecurity stock had previously experienced a 27% decline in 2024 and had a Relative Strength Rating of 22 out of 99, according to IBD Stock Checkup.
Zscaler, known for its cloud-based cybersecurity services, operates via 150 data centers globally. The company’s web security gateways play a crucial role in inspecting customers’ data traffic for malware, while the Zscaler Private Access cloud service supports remote work by replacing virtual private networks.
In a competitive landscape, Zscaler rivals companies like Palo Alto Networks (PANW), Microsoft (MSFT), and startup Wiz. In a recent development, Zscaler’s Chief Operating Officer Dali Rajic departed to join Wiz in the same role.
Zscaler stock is part of the IBD Computer-Software Security group, currently ranked 87 out of 197 groups tracked. For the latest updates on artificial intelligence, cybersecurity, and cloud computing, follow Reinhardt Krause on Twitter @reinhardtk_tech.