We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Zscaler (ZS) Q1 Earnings and Revenues Beat Estimates, Up Y/Y
Read MoreHide Full Article
Zscaler (ZS - Free Report) reported first-quarter 2024 non-GAAP earnings of 67 cents per share, which beat the Zacks Consensus Estimate by 36.7%. The company reported earnings of 29 cents per share in the year-ago quarter.
Zscaler’s first-quarter fiscal 2024 revenues were $496.7 million, which surpassed the Zacks Consensus Estimate by 4.91% and surged 39.7% year over year.
Top-Line Details
During the first quarter, Zscaler’s calculated billings increased 34% year over year to $456.6 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%.
In the reported quarter, Zscaler strengthened its portfolio with the integration of innovative zero-trust features to Workloads Communications solution and announced that it has developed a solution in collaboration with CrowdStrike and Imprivata. In the fiscal first quarter, ZS added multiple large customers across all its offerings, including ZIA, ZPA and ZDX. Its net dollar-based retention rate was 120% in the reported quarter, driven by strong upsells.
Remaining Performance Obligations (RPO), representing Zscaler’s committed non-cancelable future revenues, were $3.49 billion as of Oct 31, up 30% year over year with current RPO being approximately 51% of the total RPO.
At the end of the quarter, the company had 468 customers with $1 million or higher annualized recurring revenues (ARR). The company added 19 customers during the quarter with $1 million or more in ARR. The company’s customer count for ARR of more than $100,000 reached 2,708 at the end of the first quarter.
Operating Details
The non-GAAP gross profit increased 38.5% year over year to $401 million. However, the non-GAAP gross margin contracted 70 basis points (bps) on a year-over-year basis to 80.7%.
Total non-GAAP operating expenses, accounting for 62.7% of revenues, increased 26% year over year to $311 million. Sales and marketing, research and development, and general and administrative expenses increased 19.8%, 46.9% and 23.2%, respectively, on a year-over-year basis.
The non-GAAP operating income was $89.7 million compared with the year-ago quarter’s $42.1 million. The non-GAAP operating margin expanded 622 bps year over year to 18.1%.
Balance Sheet & Cash Flow
As of Oct 31, 2023, Zscaler had $2.32 billion in cash, cash equivalents and short-term investments compared with $2.1 billion as of Jul 31.
The company generated operating and free cash flows of $261 million and $224.7 million, respectively, during the first quarter. Zscaler generated operating and free cash flows of $128.5 million and $95.6 million, respectively, in the year-ago quarter.
Guidance Update
Zscaler revised its outlook for the fiscal 2024. The company forecasts revenues in the range of $2.09-$2.10 billion from the $2.050-$2.065 billion band as released previously. The Zacks Consensus Estimate for fiscal 2024 revenues is pegged at $2.06 billion, suggesting growth of 27.5% over fiscal 2023.
Calculated billings are expected in the range of $2.52-$2.56 billion.
The non-GAAP operating income is estimated in the band of $360-$365 million compared with the previous guidance of $330-$340 million.
Non-GAAP earnings for fiscal 2024 are expected in the band of $2.45-$2.48 per share compared with the previous guidance of $2.20-$2.25 per share. The consensus mark for fiscal 2024 earnings is pegged at $2.23 per share, unchanged over the past 30 days and is much lower than management’s guidance range.
For the second quarter of fiscal 2024, Zscaler projects revenues between $505 million and $507 million. The Zacks Consensus Estimate for second-quarter fiscal 2024 revenues is pegged at $495.2 million, suggesting growth of 27.8% year over year.
The gross margin is expected to be 80%. The non-GAAP income from operations is estimated in the band of $84-$86 million. Non-GAAP earnings per share are projected between 57 cents and 58 cents, higher than the current consensus mark of 52 cents per share, which has remained unchanged over the past 60 days.
Zacks Rank and Stocks to Consider
Currently, Zscaler carries a Zacks Rank #3 (Hold). Shares of ZS have surged 71.5% year to date.
The Zacks Consensus Estimate for NVDA’s fourth-quarter fiscal 2024 earnings has been revised by 11 cents northward to $3.87 per share in the past seven days. For fiscal 2024, earnings estimates have increased by 11 cents to $11.01 in the past seven days.
NVIDIA's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 18.99%. Shares of NVDA have rallied 230.1% year to date.
The Zacks Consensus Estimate for NetEase's fourth-quarter 2023 earnings has been revised upward by 10 cents to $1.73 per share in the past 60 days. For fiscal 2023, earnings estimates have increased by 42 cents to $6.96 per share in the past 60 days.
NTES' earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing the same on one occasion, the average surprise being 16.63%. Shares of NTES have gained 57.4% year to date.
The Zacks Consensus Estimate for Dropbox's fourth-quarter 2023 earnings has remained unchanged for the past 90 days at 48 cents per share. For fiscal 2023, earnings estimates have been revised 7 cents upward to $1.96 per share in the past 30 days.
DBX’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 13.14%. Shares of DBX have climbed 26.7% year to date.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Zscaler (ZS) Q1 Earnings and Revenues Beat Estimates, Up Y/Y
Zscaler (ZS - Free Report) reported first-quarter 2024 non-GAAP earnings of 67 cents per share, which beat the Zacks Consensus Estimate by 36.7%. The company reported earnings of 29 cents per share in the year-ago quarter.
Zscaler’s first-quarter fiscal 2024 revenues were $496.7 million, which surpassed the Zacks Consensus Estimate by 4.91% and surged 39.7% year over year.
Top-Line Details
During the first quarter, Zscaler’s calculated billings increased 34% year over year to $456.6 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%.
Zscaler, Inc. Price, Consensus and EPS Surprise
Zscaler, Inc. price-consensus-eps-surprise-chart | Zscaler, Inc. Quote
In the reported quarter, Zscaler strengthened its portfolio with the integration of innovative zero-trust features to Workloads Communications solution and announced that it has developed a solution in collaboration with CrowdStrike and Imprivata. In the fiscal first quarter, ZS added multiple large customers across all its offerings, including ZIA, ZPA and ZDX. Its net dollar-based retention rate was 120% in the reported quarter, driven by strong upsells.
Remaining Performance Obligations (RPO), representing Zscaler’s committed non-cancelable future revenues, were $3.49 billion as of Oct 31, up 30% year over year with current RPO being approximately 51% of the total RPO.
At the end of the quarter, the company had 468 customers with $1 million or higher annualized recurring revenues (ARR). The company added 19 customers during the quarter with $1 million or more in ARR. The company’s customer count for ARR of more than $100,000 reached 2,708 at the end of the first quarter.
Operating Details
The non-GAAP gross profit increased 38.5% year over year to $401 million. However, the non-GAAP gross margin contracted 70 basis points (bps) on a year-over-year basis to 80.7%.
Total non-GAAP operating expenses, accounting for 62.7% of revenues, increased 26% year over year to $311 million. Sales and marketing, research and development, and general and administrative expenses increased 19.8%, 46.9% and 23.2%, respectively, on a year-over-year basis.
The non-GAAP operating income was $89.7 million compared with the year-ago quarter’s $42.1 million. The non-GAAP operating margin expanded 622 bps year over year to 18.1%.
Balance Sheet & Cash Flow
As of Oct 31, 2023, Zscaler had $2.32 billion in cash, cash equivalents and short-term investments compared with $2.1 billion as of Jul 31.
The company generated operating and free cash flows of $261 million and $224.7 million, respectively, during the first quarter. Zscaler generated operating and free cash flows of $128.5 million and $95.6 million, respectively, in the year-ago quarter.
Guidance Update
Zscaler revised its outlook for the fiscal 2024. The company forecasts revenues in the range of $2.09-$2.10 billion from the $2.050-$2.065 billion band as released previously. The Zacks Consensus Estimate for fiscal 2024 revenues is pegged at $2.06 billion, suggesting growth of 27.5% over fiscal 2023.
Calculated billings are expected in the range of $2.52-$2.56 billion.
The non-GAAP operating income is estimated in the band of $360-$365 million compared with the previous guidance of $330-$340 million.
Non-GAAP earnings for fiscal 2024 are expected in the band of $2.45-$2.48 per share compared with the previous guidance of $2.20-$2.25 per share. The consensus mark for fiscal 2024 earnings is pegged at $2.23 per share, unchanged over the past 30 days and is much lower than management’s guidance range.
For the second quarter of fiscal 2024, Zscaler projects revenues between $505 million and $507 million. The Zacks Consensus Estimate for second-quarter fiscal 2024 revenues is pegged at $495.2 million, suggesting growth of 27.8% year over year.
The gross margin is expected to be 80%. The non-GAAP income from operations is estimated in the band of $84-$86 million. Non-GAAP earnings per share are projected between 57 cents and 58 cents, higher than the current consensus mark of 52 cents per share, which has remained unchanged over the past 60 days.
Zacks Rank and Stocks to Consider
Currently, Zscaler carries a Zacks Rank #3 (Hold). Shares of ZS have surged 71.5% year to date.
Some better-ranked stocks from the broader technology sector are NVIDIA (NVDA - Free Report) , NetEase (NTES - Free Report) and Dropbox (DBX - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVDA’s fourth-quarter fiscal 2024 earnings has been revised by 11 cents northward to $3.87 per share in the past seven days. For fiscal 2024, earnings estimates have increased by 11 cents to $11.01 in the past seven days.
NVIDIA's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 18.99%. Shares of NVDA have rallied 230.1% year to date.
The Zacks Consensus Estimate for NetEase's fourth-quarter 2023 earnings has been revised upward by 10 cents to $1.73 per share in the past 60 days. For fiscal 2023, earnings estimates have increased by 42 cents to $6.96 per share in the past 60 days.
NTES' earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing the same on one occasion, the average surprise being 16.63%. Shares of NTES have gained 57.4% year to date.
The Zacks Consensus Estimate for Dropbox's fourth-quarter 2023 earnings has remained unchanged for the past 90 days at 48 cents per share. For fiscal 2023, earnings estimates have been revised 7 cents upward to $1.96 per share in the past 30 days.
DBX’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 13.14%. Shares of DBX have climbed 26.7% year to date.