Cloud security provider Zscaler's shares rise on stronger-than-expected earnings

Shares in Zscaler Inc. rose in after-hours trading today after the cloud security provider delivered better-than-expected earnings results.

For the quarter ended July 31, Zscaler reported revenue jumped 57% from a year ago, to $197.1 million. Profit before costs such as stock compensation came in at $20.4 million, or 14 cents per share. Analysts had expected earnings of seven cents per share and the revenue figure was up nearly 5% over the predicted figure.

Zscaler’s cash flow in the quarter came in at $44.7 million, or 23% of revenue, while free cash flow was $27.7 million, or 14% of revenue. Deferred revenue rose 71%, to $630.6 million as of July 31.

Highlights in the quarter included new integrations with ServiceNow and Zscaler’s selection as a key partner for the Zero Trust Architecture Project by the U.S. National Institute of Standards and Technology’s National Cybersecurity Center for Excellence. Zscaler is working alongside the NCCoE and other federal information technology vendors on ways to innovate approaches on how to implement zero-trust infrastructure.

Zscaler’s ThreatLabZ also delivered a report on the current state of “internet of things” malware on devices still connected inside empty office campuses during the COVID-19 pandemic. The Zscaler Zero Trust Exchange blocked more than 800 IoT malware attacks per hour against these devices, up 700% year-over-year.

For the company’s full fiscal year 2021, Zscaler reported revenue of $673.1 million, up 56% from the previous fiscal year. Adjusted profit nearly doubled, to $79.3 million.

“Enterprises of all sizes are adopting Zscaler’s Zero Trust Exchange to accelerate their secure digital transformation journey as they turn away from legacy castle-and-moat security,” Jay Chaudhry, chairman and chief executive officer, said in a statement. “We continue to invest and innovate across all our product pillars and help our customers adopt a Zero Trust architecture designed to secure the cloud and mobile world.”

Looking forward, Zscaler said it expects an adjusted profit of $18 million to $19 million, or about 12 cents per share, on revenue of $210 million to $212 million in the first quarter of its fiscal 2022 year. Analysts had been predicting a profit of 12 cents per share on revenue of $199.5 million in the next quarter.

For the full fiscal year 2022, the company is predicting revenue of $940 million to $950 million and an adjusted profit of $85 million to $90 million, or 52 to 56 cents per share.

Investors liked the numbers. Shares in Zscaler rose about 2.5% after the bell.

Image: Zscaler