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Is Zscaler (ZS) Likely to Surpass Q3 Earnings Estimates?
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Zscaler (ZS - Free Report) is likely to beat expectations when it reports third-quarter fiscal 2023 results on Jun 1, after market close.
For the third quarter, Zscaler projects total revenues between $396 million and $398 million. The Zacks Consensus Estimate for the same is pegged at $410.7 million, suggesting growth of 43.2% from the year-ago quarter.
Zscaler anticipates non-GAAP earnings of approximately 39 cents per share. The Zacks Consensus Estimate for the bottom line is pegged at 42 cents per share.
The cloud-based security solution provider projects non-GAAP income from operations between $55 million and $56 million. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 29.7%.
With hybrid work being the new normal, an increasing number of people have been logging into employers' networks through off-premises locations, which has triggered the need for greater security. This trend is anticipated to have spurred the demand for Zscaler’s products in the quarter under review.
Zscaler’s third-quarter results are likely to reflect the continued solid demand for its security and networking products, given the healthy environment of the global security market. The solid adoption of its in-cloud security platform, Zero Trust Exchange, due to the ongoing digital transformation across enterprises is likely to have acted as a key catalyst.
The increased adoption of Software-Defined Wide Area Network (SD-WAN) solutions might have acted as a key growth driver in the quarter to be reported. Per the latest Verified Market Research report, the market size for SD-WAN solutions could reach $44.2 billion in 2030 from $2.83 billion in 2023, indicating a CAGR of 35.9% during the forecast period.
As there are only a few vendors that offer security and SD-WAN solutions, ZS has been capitalizing on the increasing opportunities in the market. The company’s collaboration with VMware and Silver Peak has been helping it secure SD-WAN deployments. This is likely to have positively impacted Zscaler’s fiscal third-quarter performance.
ZS’ existing core products, especially the Zscaler Internet Access and the Zscaler Private Access, have been driving customer retention. The addition of new capabilities to its Zero Trust Exchange, such as Cloud Access Security Broker, Cloud Browser Isolation, Cloud Protection, Zscaler Digital Experience and Cloud Security Posture Management for Software-as-a-service applications, is likely to have driven its product portfolio expansion and customer acquisition.
However, increased investments to enhance sales and marketing (S&M) capabilities and higher research and development (R&D) expenses may have weighed on the company’s to-be-reported quarter’s bottom line.
The company witnessed a year-over-year increase of 41.9% in non-GAAP S&M and 43.5% in non-GAAP R&D expenses in the last reported quarter. Total non-GAAP operating expenses climbed 43.5% year over year in the last reported quarter.
Earnings Whisper
Our proven model predicts an earnings beat for Zscaler this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate (44 cents per share) and the Zacks Consensus Estimate (42 cents per share), is +4.47%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: ZS carries a Zacks Rank #3 at present.
Other Stocks With the Favorable Combination
Per our model, C3.ai (AI - Free Report) , lululemon athletica (LULU - Free Report) and Carnival (CCL - Free Report) also have the right combination of elements to post an earnings beat in the upcoming releases.
C3.ai has an Earnings ESP of +6.67% and carries a Zacks Rank #3 at present. The company is scheduled to report its fourth-quarter fiscal 2023 results on May 31. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 46.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AI’s fiscal fourth-quarter loss is pegged at 17 cents per share, indicating a 19.1% surge from the year-ago quarter’s loss per share of 21 cents. The consensus mark for revenues is $72.3 million, remaining flat year over year.
Currently, lululemon has an Earnings ESP of +0.24% and carries a Zacks Rank #3. The company is scheduled to report its first-quarter fiscal 2024 results on Jun 1. LULU’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average earnings surprise of 6.8%.
The Zacks Consensus Estimate for LULU’s fiscal first-quarter earnings is $1.97 per share, indicating a year-over-year surge of 33.1%. The company is estimated to report revenues of $1.92 billion, which suggests an increase of 19.3% from the year-ago quarter.
Carnival has an Earnings ESP of +0.42% and carries a Zacks Rank #3 at present. The company is likely to report second-quarter fiscal 2023 results on Jun 23. CCL’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average negative surprise being 102.9%.
The Zacks Consensus Estimate for CCL’s quarterly loss is pegged at 34 cents per share, suggesting a year-over-year increase of 79.3%. Its quarterly revenues are estimated to increase 100% year over year to $4. 80 billion.
Image: Bigstock
Is Zscaler (ZS) Likely to Surpass Q3 Earnings Estimates?
Zscaler (ZS - Free Report) is likely to beat expectations when it reports third-quarter fiscal 2023 results on Jun 1, after market close.
For the third quarter, Zscaler projects total revenues between $396 million and $398 million. The Zacks Consensus Estimate for the same is pegged at $410.7 million, suggesting growth of 43.2% from the year-ago quarter.
Zscaler anticipates non-GAAP earnings of approximately 39 cents per share. The Zacks Consensus Estimate for the bottom line is pegged at 42 cents per share.
The cloud-based security solution provider projects non-GAAP income from operations between $55 million and $56 million. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 29.7%.
Zscaler, Inc. Price and EPS Surprise
Zscaler, Inc. price-eps-surprise | Zscaler, Inc. Quote
Factors to Consider
With hybrid work being the new normal, an increasing number of people have been logging into employers' networks through off-premises locations, which has triggered the need for greater security. This trend is anticipated to have spurred the demand for Zscaler’s products in the quarter under review.
Zscaler’s third-quarter results are likely to reflect the continued solid demand for its security and networking products, given the healthy environment of the global security market. The solid adoption of its in-cloud security platform, Zero Trust Exchange, due to the ongoing digital transformation across enterprises is likely to have acted as a key catalyst.
The increased adoption of Software-Defined Wide Area Network (SD-WAN) solutions might have acted as a key growth driver in the quarter to be reported. Per the latest Verified Market Research report, the market size for SD-WAN solutions could reach $44.2 billion in 2030 from $2.83 billion in 2023, indicating a CAGR of 35.9% during the forecast period.
As there are only a few vendors that offer security and SD-WAN solutions, ZS has been capitalizing on the increasing opportunities in the market. The company’s collaboration with VMware and Silver Peak has been helping it secure SD-WAN deployments. This is likely to have positively impacted Zscaler’s fiscal third-quarter performance.
ZS’ existing core products, especially the Zscaler Internet Access and the Zscaler Private Access, have been driving customer retention. The addition of new capabilities to its Zero Trust Exchange, such as Cloud Access Security Broker, Cloud Browser Isolation, Cloud Protection, Zscaler Digital Experience and Cloud Security Posture Management for Software-as-a-service applications, is likely to have driven its product portfolio expansion and customer acquisition.
However, increased investments to enhance sales and marketing (S&M) capabilities and higher research and development (R&D) expenses may have weighed on the company’s to-be-reported quarter’s bottom line.
The company witnessed a year-over-year increase of 41.9% in non-GAAP S&M and 43.5% in non-GAAP R&D expenses in the last reported quarter. Total non-GAAP operating expenses climbed 43.5% year over year in the last reported quarter.
Earnings Whisper
Our proven model predicts an earnings beat for Zscaler this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate (44 cents per share) and the Zacks Consensus Estimate (42 cents per share), is +4.47%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: ZS carries a Zacks Rank #3 at present.
Other Stocks With the Favorable Combination
Per our model, C3.ai (AI - Free Report) , lululemon athletica (LULU - Free Report) and Carnival (CCL - Free Report) also have the right combination of elements to post an earnings beat in the upcoming releases.
C3.ai has an Earnings ESP of +6.67% and carries a Zacks Rank #3 at present. The company is scheduled to report its fourth-quarter fiscal 2023 results on May 31. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 46.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AI’s fiscal fourth-quarter loss is pegged at 17 cents per share, indicating a 19.1% surge from the year-ago quarter’s loss per share of 21 cents. The consensus mark for revenues is $72.3 million, remaining flat year over year.
Currently, lululemon has an Earnings ESP of +0.24% and carries a Zacks Rank #3. The company is scheduled to report its first-quarter fiscal 2024 results on Jun 1. LULU’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average earnings surprise of 6.8%.
The Zacks Consensus Estimate for LULU’s fiscal first-quarter earnings is $1.97 per share, indicating a year-over-year surge of 33.1%. The company is estimated to report revenues of $1.92 billion, which suggests an increase of 19.3% from the year-ago quarter.
Carnival has an Earnings ESP of +0.42% and carries a Zacks Rank #3 at present. The company is likely to report second-quarter fiscal 2023 results on Jun 23. CCL’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average negative surprise being 102.9%.
The Zacks Consensus Estimate for CCL’s quarterly loss is pegged at 34 cents per share, suggesting a year-over-year increase of 79.3%. Its quarterly revenues are estimated to increase 100% year over year to $4. 80 billion.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.