ZS Share: Zscaler Earnings Top Views, but Billing Size Disappoints

Zscaler (ZS) reported second-quarter fiscal revenue and earnings that exceeded Wall Street’s targets. But billing growth was limited only by analyst estimates, and ZS shares plummeted on Friday’s news.


The cybersecurity company released its earnings report after market close on Thursday. Zscaler announced a restructuring and headcount reduction to streamline operations.

For the quarter ended Jan. 31, Zscaler’s earnings were 37 cents per share on an adjusted basis, up 184% from a year earlier. Sales rose 52% to $387.6 million, the San Jose, California-based company said.

Analysts expected Zscaler earnings of 29 cents per share on revenue of $364.7 million. Bills also rose 34% to $493.8 million, compared to estimates for $491.5 million.

“On paper, Zscaler delivered a good quarter, but billing growth of 34% was below investor expectations as delayed and slower deals again impacted growth in the quarter,” said UBS analyst Roger Boyd in a note to customers.

ZS Stock: Palo Alto Competition Rises?

Shares of ZS fell 12.7% to nearly 117 today in early trading in the stock market.

For the full fiscal year 2023, Zscaler forecasts bills of $1.94 billion in the midpoint of its outlook, slightly above estimates of $1.93 billion.

“While customers continue to apply heightened levels of deal control, extending sales cycles, ZS notes that deals are not going away,” TD Cowen analyst Shaul Eyal said in a note.

Some analysts point to increased competition that Zscaler faces Palo Alto Networks (PANW).

Zscaler provides cloud-based cybersecurity services through 150 data centers worldwide.

Heading into Zscaler’s earnings report, ZS stock held a relative strength rating of 18 out of the best possible 99, according to IBD Stock Checkup.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.


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