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.
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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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