ZS Stock: Zscaler Earnings Top Views But Size Of Billings Beat Disappoints

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Zscaler (ZS) reported fiscal second-quarter earnings and revenue that topped Wall Street targets. But billings growth merely edged by analyst estimates, and ZS stock plummeted on the news Friday.


The cybersecurity firm released its earnings report after the market close on Thursday. Zscaler announced a restructuring and staff reduction aimed at streamlining operations.

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

Analysts expected Zscaler earnings of 29 cents per share on sales of $364.7 million. Also, billings rose 34% to $493.8 million, compared with estimates for $491.5 million.

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

ZS Stock: Palo Alto Competition Rising?

ZS stock plunged 12.7% to near 117 in early trading on the stock market today.

For full-year fiscal 2023, Zscaler forecast billings of $1.94 billion at the midpoint of its outlook, slightly above estimates of $1.93 billion.

“Although customers continue to apply elevated levels of deal scrutiny, stretching sales cycles, ZS notes deals are not going away,” TD Cowen analyst Shaul Eyal said in a note.

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

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

Heading into the Zscaler earnings report, ZS stock owned a Relative Strength Rating of 18 out of a 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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