Zscaler Reports Growth Yet Stock Drops 13% on Outlook
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Zscaler's Recent Performance and Stock Reaction
Zscaler (NASDAQ: ZS) recently unveiled its fourth-quarter results, showcasing impressive performance that unfortunately didn’t translate into positive stock momentum. The cloud security company reported adjusted earnings per share of $0.88, beating analyst projections of $0.70. With revenue hitting $592.9 million, this marked a substantial 30% year-on-year increase and exceeded consensus expectations of $567.46 million. Such impressive figures generally lift investor confidence, but the opposite occurred.
Profit Outlook Disappoints Investors
Despite Zscaler’s strong quarterly results, the financial outlook for the upcoming fiscal year disappointed many investors. The company has projected adjusted earnings between $2.81 and $2.87 per share, falling short of the $3.01 analysts had anticipated. Revenue expectations for fiscal 2025 are set at $2.60 billion to $2.62 billion, which aligns with estimates but does little to alleviate concerns.
CEO Comments on Growth and Platform Adoption
Jay Chaudhry, Chairman and CEO of Zscaler, expressed confidence in the company’s trajectory, stating, "We ended a successful Fiscal 2024 with Q4 results exceeding the high end of our guidance across all metrics." He emphasized the growing adoption of the Zero Trust Exchange platform, noting its pivotal role in the company’s growth. He proudly mentioned that the cloud platform is now surpassing over half a trillion transactions daily, highlighting Zscaler’s scalability and efficiency.
Future Revenue Expectations
Looking ahead, Zscaler projects revenues for the first quarter of fiscal 2025 between $604 million and $606 million, which is slightly higher than consensus. However, the adjusted EPS forecast of $0.62 to $0.63 remains below the expectations of $0.73 from analysts. This projection indicates the challenges that lie ahead for the company as it strives to maintain its growth momentum.
Deferred Revenue and Cash Flow Insights
One encouraging sign for Zscaler is the notable increase in deferred revenue, which serves as an important indicator of future growth avenues. The company recorded a 32% year-on-year surge, bringing the deferred revenue total to $1.895 billion. Additionally, Zscaler reported a cash flow from operations of $203.6 million, representing a robust 34% of total revenue, which suggests a stable operational foundation.
Frequently Asked Questions
What were Zscaler's Q4 earnings per share?
Zscaler reported adjusted earnings per share of $0.88 for the fourth quarter.
How much revenue did Zscaler generate in Q4?
The company's revenue for the fourth quarter reached $592.9 million.
What is Zscaler's profit outlook for fiscal 2025?
Zscaler forecasts full-year adjusted earnings of $2.81 to $2.87 per share.
How has Zscaler's deferred revenue changed?
Deferred revenue has increased by 32% year-on-year to $1.895 billion.
What is Zscaler's expected revenue for Q1 of fiscal 2025?
Zscaler expects revenue between $604 million and $606 million for the first quarter.
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