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The company reported non-GAAP earnings of 37 cents per share, which beat the Zacks Consensus Estimate of 29 cents. The bottom line jumped 184.6% year over year.
Zscaler’s second-quarter fiscal 2023 revenues were $387.6 million, surpassing the Zacks Consensus Estimate of $363.8 million. The top line improved 52% from the prior-year reported figure.
During the fiscal second quarter, Zscaler’s calculated billings increased 34% year over year to $493.8 million.
Region-wise, the Americas accounted for 53% of revenues, while the EMEA contributed 32%. The Asia Pacific and Japan made up the remaining 15%.
ZS' Zero Trust Exchange platform acted as a key catalyst in the fiscal second 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 second 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 more than 125%.
Remaining Performance Obligations, representing ZS’ committed non-cancelable future revenues, were $2.81 billion as of Dec 31, significantly up 44% year over year.
During the quarter, the company had 378 customers with $1 million or higher annualized recurring revenues. The figure, which is the highest so far, surged 51% year over year.
The company added 120 customers during the quarter that pay $100,000 annually. The total count of such customers reached 2,337 at the end of the fiscal second quarter.
Operating Details
In the fiscal second quarter, non-GAAP gross profit was $311.8 million. Non-GAAP gross margin remained flat on a year-over-year basis at 80%.
Total non-GAAP operating expenses, accounting for 68% of revenues, climbed 43.5% to $262.9 million.
Non-GAAP operating income was $48.8 million compared with the previous quarter’s $42.1 million and the year-ago quarter’s $22.3 million. Non-GAAP operating margin expanded 400 basis points (bps) year over year to 13%. Sequentially, the margin grew 100 bps.
Balance Sheet & Cash Flow
As of Jan 31, 2023, Zscaler had $1.91 billion in cash, cash equivalents and short-term investments compared with the previous quarter’s $1.82 billion.
The company generated operating and free cash flows of $89.5 million and $62.8 million, respectively.
Guidance
Zscaler raised its guidance for fiscal 2023. For the full fiscal, the company now anticipates revenues between $1.558 billion and $1.563 billion, up from the earlier forecast of $1.525-$1.53 billion.
Calculated billings are still expected in the range of $1.935-$1.945 billion.
Non-GAAP operating income is estimated to be $213-$215 million instead of the earlier projection of $179-$183 million. Non-GAAP earnings for fiscal 2023 are now expected to be $1.52-$1.53 per share, up from $1.23-$1.25 per share forecasted previously.
For the third quarter of fiscal 2023, Zscaler projects revenues between $396 million and $398 million. Non-GAAP income from operations is estimated to be $55-$56 million. Non-GAAP earnings are projected to be approximately 39 cents per share.
Zacks Rank & Stocks to Consider
Zscaler carries a Zacks Rank #3 (Hold). Shares of ZS have lost 44.5% over the past year.
The Zacks Consensus Estimate for Airbnb’s first-quarter 2023 earnings has been revised northward from breakeven to 14 cents per share over the past 30 days. For 2023, earnings estimates have moved up by 52 cents to $3.38 per share in the past 30 days.
ABNB's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 57.2%. Shares of the company have declined 19.3% in the past year.
The Zacks Consensus Estimate for Baidu’s first-quarter 2023 earnings has been revised 15 cents northward to $2.43 per share over the past 60 days. For 2023, earnings estimates have rose by 6.4% to $11.62 per share over the past 60 days.
BIDU’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 45.5%. Shares of the company have lost 3.1% in the past year.
The Zacks Consensus Estimate for Fabrinet's third-quarter fiscal 2023 earnings has been revised 7 cents upward to $1.90 per share over the past 30 days. For fiscal 2023, earnings estimates have moved north by 24 cents to $7.71 per share in the past 30 days.
FN’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing once, the average surprise being 5.1%. Shares of the company have jumped 22.5% in the past year.
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Zscaler (ZS) Q2 Earnings and Sales Surpass Estimates, Up Y/Y
Zscaler (ZS - Free Report) delivered a better-than-anticipated second-quarter fiscal 2023 performance.
The company reported non-GAAP earnings of 37 cents per share, which beat the Zacks Consensus Estimate of 29 cents. The bottom line jumped 184.6% year over year.
Zscaler’s second-quarter fiscal 2023 revenues were $387.6 million, surpassing the Zacks Consensus Estimate of $363.8 million. The top line improved 52% 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 fiscal second quarter, Zscaler’s calculated billings increased 34% year over year to $493.8 million.
Region-wise, the Americas accounted for 53% of revenues, while the EMEA contributed 32%. The Asia Pacific and Japan made up the remaining 15%.
ZS' Zero Trust Exchange platform acted as a key catalyst in the fiscal second 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 second 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 more than 125%.
Remaining Performance Obligations, representing ZS’ committed non-cancelable future revenues, were $2.81 billion as of Dec 31, significantly up 44% year over year.
During the quarter, the company had 378 customers with $1 million or higher annualized recurring revenues. The figure, which is the highest so far, surged 51% year over year.
The company added 120 customers during the quarter that pay $100,000 annually. The total count of such customers reached 2,337 at the end of the fiscal second quarter.
Operating Details
In the fiscal second quarter, non-GAAP gross profit was $311.8 million. Non-GAAP gross margin remained flat on a year-over-year basis at 80%.
Total non-GAAP operating expenses, accounting for 68% of revenues, climbed 43.5% to $262.9 million.
Non-GAAP operating income was $48.8 million compared with the previous quarter’s $42.1 million and the year-ago quarter’s $22.3 million. Non-GAAP operating margin expanded 400 basis points (bps) year over year to 13%. Sequentially, the margin grew 100 bps.
Balance Sheet & Cash Flow
As of Jan 31, 2023, Zscaler had $1.91 billion in cash, cash equivalents and short-term investments compared with the previous quarter’s $1.82 billion.
The company generated operating and free cash flows of $89.5 million and $62.8 million, respectively.
Guidance
Zscaler raised its guidance for fiscal 2023. For the full fiscal, the company now anticipates revenues between $1.558 billion and $1.563 billion, up from the earlier forecast of $1.525-$1.53 billion.
Calculated billings are still expected in the range of $1.935-$1.945 billion.
Non-GAAP operating income is estimated to be $213-$215 million instead of the earlier projection of $179-$183 million. Non-GAAP earnings for fiscal 2023 are now expected to be $1.52-$1.53 per share, up from $1.23-$1.25 per share forecasted previously.
For the third quarter of fiscal 2023, Zscaler projects revenues between $396 million and $398 million. Non-GAAP income from operations is estimated to be $55-$56 million. Non-GAAP earnings are projected to be approximately 39 cents per share.
Zacks Rank & Stocks to Consider
Zscaler carries a Zacks Rank #3 (Hold). Shares of ZS have lost 44.5% over the past year.
Some top-ranked stocks from the broader Computer and Technology sector are Airbnb (ABNB - Free Report) , Baidu (BIDU - Free Report) , and Fabrinet (FN - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Airbnb’s first-quarter 2023 earnings has been revised northward from breakeven to 14 cents per share over the past 30 days. For 2023, earnings estimates have moved up by 52 cents to $3.38 per share in the past 30 days.
ABNB's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 57.2%. Shares of the company have declined 19.3% in the past year.
The Zacks Consensus Estimate for Baidu’s first-quarter 2023 earnings has been revised 15 cents northward to $2.43 per share over the past 60 days. For 2023, earnings estimates have rose by 6.4% to $11.62 per share over the past 60 days.
BIDU’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 45.5%. Shares of the company have lost 3.1% in the past year.
The Zacks Consensus Estimate for Fabrinet's third-quarter fiscal 2023 earnings has been revised 7 cents upward to $1.90 per share over the past 30 days. For fiscal 2023, earnings estimates have moved north by 24 cents to $7.71 per share in the past 30 days.
FN’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing once, the average surprise being 5.1%. Shares of the company have jumped 22.5% in the past year.