Zscaler Earnings: Impressive Traction in Emerging Products Drives Sales Growth for the Quarter

We maintain our $213 per share fair value estimate for narrow-moat Zscaler after the firm reported fiscal third-quarter earnings with sales and profitability exceeding the firm’s prior guidance. Along with strong execution in its core business, we were encouraged to see a fourth of Zscaler’s new and upselling business coming from its emerging products category. The strong growth in emerging products, coupled with management’s commentary on customer spending, lends further credence to our existing thesis that Zscaler stands to benefit from increased vendor consolidation as customers seek to simplify their cybersecurity outlay.