UPDATED 22:51 EST / FEBRUARY 25 2021

SECURITY

Zscaler’s shares rise on stronger-than-expected earnings

Shares in Zscaler Inc. rose in after-hours trading today after the cloud security provider beat analysts’ expectations in its fiscal second-quarter earnings.

For the quarter ended Jan. 31, Zscaler reported it earned an operating profit before costs such as stock compensation of $14.8 million or 10 cents a share on a 55% jump in revenue from a year ago, to $157 million. Analysts had been predicting an adjusted profit of eight cents a share on revenue of $147.4 million.

Deferred revenue in the quarter came in at $446.8 million in the quarter, while cash provided by operations was booked at $30.4 million or 19% of revenue, up from $5.4 million or 5% of revenue a year ago.

Highlights in the quarter included the launch of a security assessment program designed to help organizations assess the SolarWinds supply-chain attack, analyze potential impact on their organization and adhere to Zscaler’s recommended best practices. The hack of SolarWinds Worldwide LLC was, in at least in the words of Microsoft Corp. President Brad Smith, the “largest and most sophisticated attack ever.”

For the quarter ahead, Zscaler predicted an adjusted profit of $11 million to $12 million, or seven cents a share, on revenue of $162 million to $164 million. For the full year, the company is estimating total revenue of $634 million to $6638 million and an adjusted profit of $59 million to $61 million, or 39 to 40 cents per share.

Analysts had been predicting seven cents a share on revenue of $153.7 million for Zscaler’s third quarter and 38 cents per share on revenue of $611.9 million for the year.

“Businesses are accelerating their digital transformation, and this drove our strong second-quarter results,” Jay Chaudhry, chairman and chief executive officer of Zscaler, said in a statement. “Our customers are turning to Zscaler’s Zero Trust Exchange to implement Zero Trust architecture to protect users, workloads and applications, and improve user experience. With strong momentum in our business, we will continue to aggressively invest to pursue our large market opportunity.”

Zscaler shares fell 5.8%, to $195.79, in regular trading on the day that the Nasdaq composite dropped 3.5%. That said, investors like the figures, as Zscaler’s share pricing rose more than 4% in after-hours trading.

Image: Zscaler

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