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The company reported non-GAAP earnings of 25 cents per share, which beat the Zacks Consensus Estimate of 20 cents. The bottom line jumped 78.6% year over year.
Zscaler’s fourth-quarter fiscal 2022 revenues were $318.1 million, surpassing the Zacks Consensus Estimate of $305.6 million. The top line improved 61% from the prior-year reported figure.
During the fourth quarter of fiscal 2022, Zscaler’s calculated billings increased 57% year over year to $520.4 million.
Geographically, the Americas accounted for 52% of revenues, while the EMEA contributed 33%. The Asia Pacific and Japan made up the remaining 15%.
ZS's Zero Trust Exchange platform acted as a key catalyst in the fourth quarter. The company benefited from sustained demand for its products, given the healthy environment of the global security market. Increased cyber and ransomware risks, coupled with accelerated digital transformation, contributed significantly to the growth.
Customer Details
In the fiscal fourth quarter, Zscaler continued to win multiple customers in each of its three market segments: financial services, enterprise market and federal. Its net dollar-based retention rate was over 125%.
Remaining Performance Obligations, representing ZS’s committed non-cancellable future revenues, were $2.61 billion as of Jul 31, significantly up 68% year over year.
During the fiscal fourth quarter, the company had 327 customers with $1 million or higher annualized recurring revenues (“ARR”). The figure, which is the highest so far, surged 62% year over year.
The company had 2,089 customers with $100,000 or higher ARR. The figure reflected year-over-year growth of 41.1%.
Operating Details
In the fiscal fourth quarter, non-GAAP gross profit was $259.4 million. Non-GAAP gross margin expanded 200 basis points (bps) to 82% on a year-over-year basis and 100 bps on a quarter-over-quarter basis.
Non-GAAP research & development (14% of revenues), sales & marketing (49.2% of revenues), and general & administrative (6.4% of total revenues) expenses increased 45.4%, 67.7% and 45% to $44.5 million, $156.5 million and $20.3 million, respectively.
Total non-GAAP operating expenses, accounting for 69.6% of revenues, climbed 60.4% to $221.3 million.
Non-GAAP operating income was $38.1 million compared with the previous quarter’s $27.2 million and the year-ago quarter’s $20.6 million. Non-GAAP operating margin expanded 200 bps year over year at 12%. Sequentially, the margin expanded 300 bps.
Balance Sheet & Cash Flow
As of Jul 31, 2022, Zscaler had $1.73 billion in cash, cash equivalents and short-term investments compared with the previous quarter’s $1.66 billion.
Cash flow generated through operating activities was $103.1 million, up from the previous quarter’s $77.2 million. Consequently, free cash flow was $74.8 million, significantly higher than the $43.7 million in the third quarter of fiscal 2022.
Free cash flow margin expanded 1000 bps to 24% in the quarter reported. Deferred revenues were $1.02 billion, up 62% year over year.
During fiscal 2022, Zscaler generated $321.9 million worth of cash through operating activities and $231.3 worth of free cash flow. The free cash flow margin remained flat at 21% during the period.
Full-Year Highlights
ZS reported revenues of $1.09 billion in full-year fiscal 2022, up 62% year over year. Calculated billings were $1.48 billion, reflecting a 58.6% year-over-year surge.
Non-GAAP earnings per share increased 32.7% year over year to 69 cents.
Non-GAAP operating income for fiscal 2022 climbed 43.1% year over year to $111.6 million. However, the operating margin contracted 200 bps to 10%.
Non-GAAP gross margin remained flat at 81%.
Guidance
For the first quarter of fiscal 2023, Zscaler projects revenues between $339 million and $341 million. Non-GAAP earnings are projected to be approximately 26 cents per share.
Non-GAAP income from operations is estimated to be $37-$38 million.
For full fiscal 2023, Zscaler anticipates revenues of approximately $1.49-$1.50 billion. Calculated billings are anticipated in the range of $1.92-$1.94 billion.
Non-GAAP earnings for fiscal 2023 are expected to be $1.16-$1.18 per share. Non-GAAP operating income is estimated to be $173-$176 million.
The Zacks Consensus Estimate for Clearfield's fourth-quarter fiscal 2022 earnings has been revised 10 cents north to 80 cents per share over the past 60 days. For fiscal 2022, earnings estimates have moved 36 cents north to $3.13 per share in the past 60 days.
Clearfield’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 33.9%. Shares of CLFD have increased 123.7% in the past year.
The Zacks Consensus Estimate for Silicon Laboratories’ third-quarter 2022 earnings has increased 36% to $1.13 per share over the past 60 days. For 2022, earnings estimates have moved 25% up to $1.05 per share in the past 60 days.
Silicon Laboratories’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 63.6%. Shares of SLAB have decreased 12.7% in the past year.
The Zacks Consensus Estimate for Taiwan Semiconductor's third-quarter 2022 earnings has been revised a penny southward to $1.69 per share over the past 30 days. For 2022, earnings estimates have moved 41 cents north to $6.30 per share in the past 60 days.
TSM's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 3.9%. Shares of the company have decreased 34.6% in the past year.
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Zscaler (ZS) Q4 Earnings and Revenues Beat Estimates, Up Y/Y
Zscaler (ZS - Free Report) delivered a better-than-anticipated fourth-quarter fiscal 2022 performance.
The company reported non-GAAP earnings of 25 cents per share, which beat the Zacks Consensus Estimate of 20 cents. The bottom line jumped 78.6% year over year.
Zscaler’s fourth-quarter fiscal 2022 revenues were $318.1 million, surpassing the Zacks Consensus Estimate of $305.6 million. The top line improved 61% from the prior-year reported figure.
Zscaler, Inc. Price, Consensus and EPS Surprise
Zscaler, Inc. price-consensus-eps-surprise-chart | Zscaler, Inc. Quote
Top-Line Details
During the fourth quarter of fiscal 2022, Zscaler’s calculated billings increased 57% year over year to $520.4 million.
Geographically, the Americas accounted for 52% of revenues, while the EMEA contributed 33%. The Asia Pacific and Japan made up the remaining 15%.
ZS's Zero Trust Exchange platform acted as a key catalyst in the fourth quarter. The company benefited from sustained demand for its products, given the healthy environment of the global security market. Increased cyber and ransomware risks, coupled with accelerated digital transformation, contributed significantly to the growth.
Customer Details
In the fiscal fourth quarter, Zscaler continued to win multiple customers in each of its three market segments: financial services, enterprise market and federal. Its net dollar-based retention rate was over 125%.
Remaining Performance Obligations, representing ZS’s committed non-cancellable future revenues, were $2.61 billion as of Jul 31, significantly up 68% year over year.
During the fiscal fourth quarter, the company had 327 customers with $1 million or higher annualized recurring revenues (“ARR”). The figure, which is the highest so far, surged 62% year over year.
The company had 2,089 customers with $100,000 or higher ARR. The figure reflected year-over-year growth of 41.1%.
Operating Details
In the fiscal fourth quarter, non-GAAP gross profit was $259.4 million. Non-GAAP gross margin expanded 200 basis points (bps) to 82% on a year-over-year basis and 100 bps on a quarter-over-quarter basis.
Non-GAAP research & development (14% of revenues), sales & marketing (49.2% of revenues), and general & administrative (6.4% of total revenues) expenses increased 45.4%, 67.7% and 45% to $44.5 million, $156.5 million and $20.3 million, respectively.
Total non-GAAP operating expenses, accounting for 69.6% of revenues, climbed 60.4% to $221.3 million.
Non-GAAP operating income was $38.1 million compared with the previous quarter’s $27.2 million and the year-ago quarter’s $20.6 million. Non-GAAP operating margin expanded 200 bps year over year at 12%. Sequentially, the margin expanded 300 bps.
Balance Sheet & Cash Flow
As of Jul 31, 2022, Zscaler had $1.73 billion in cash, cash equivalents and short-term investments compared with the previous quarter’s $1.66 billion.
Cash flow generated through operating activities was $103.1 million, up from the previous quarter’s $77.2 million. Consequently, free cash flow was $74.8 million, significantly higher than the $43.7 million in the third quarter of fiscal 2022.
Free cash flow margin expanded 1000 bps to 24% in the quarter reported. Deferred revenues were $1.02 billion, up 62% year over year.
During fiscal 2022, Zscaler generated $321.9 million worth of cash through operating activities and $231.3 worth of free cash flow. The free cash flow margin remained flat at 21% during the period.
Full-Year Highlights
ZS reported revenues of $1.09 billion in full-year fiscal 2022, up 62% year over year. Calculated billings were $1.48 billion, reflecting a 58.6% year-over-year surge.
Non-GAAP earnings per share increased 32.7% year over year to 69 cents.
Non-GAAP operating income for fiscal 2022 climbed 43.1% year over year to $111.6 million. However, the operating margin contracted 200 bps to 10%.
Non-GAAP gross margin remained flat at 81%.
Guidance
For the first quarter of fiscal 2023, Zscaler projects revenues between $339 million and $341 million. Non-GAAP earnings are projected to be approximately 26 cents per share.
Non-GAAP income from operations is estimated to be $37-$38 million.
For full fiscal 2023, Zscaler anticipates revenues of approximately $1.49-$1.50 billion. Calculated billings are anticipated in the range of $1.92-$1.94 billion.
Non-GAAP earnings for fiscal 2023 are expected to be $1.16-$1.18 per share. Non-GAAP operating income is estimated to be $173-$176 million.
Shares of ZS have plunged 44.9% in the past year.
Zacks Rank & Stocks to Consider
Zscaler currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader Computer and Technology sector are Clearfield (CLFD - Free Report) , Silicon Laboratories (SLAB - Free Report) and Taiwan Semiconductor (TSM - Free Report) . While Clearfield and Silicon Laboratories flaunt a Zacks Rank #1 (Strong Buy), Taiwan Semiconductor carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Clearfield's fourth-quarter fiscal 2022 earnings has been revised 10 cents north to 80 cents per share over the past 60 days. For fiscal 2022, earnings estimates have moved 36 cents north to $3.13 per share in the past 60 days.
Clearfield’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 33.9%. Shares of CLFD have increased 123.7% in the past year.
The Zacks Consensus Estimate for Silicon Laboratories’ third-quarter 2022 earnings has increased 36% to $1.13 per share over the past 60 days. For 2022, earnings estimates have moved 25% up to $1.05 per share in the past 60 days.
Silicon Laboratories’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 63.6%. Shares of SLAB have decreased 12.7% in the past year.
The Zacks Consensus Estimate for Taiwan Semiconductor's third-quarter 2022 earnings has been revised a penny southward to $1.69 per share over the past 30 days. For 2022, earnings estimates have moved 41 cents north to $6.30 per share in the past 60 days.
TSM's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 3.9%. Shares of the company have decreased 34.6% in the past year.