Zscaler's stock drops after big whiff on profit outlook outweighs earnings beat

By Emily Bary

Cybersecurity company edges consensus view with revenue forecast for the current quarter

Zscaler Inc. came up short with its profit outlook on Tuesday, and that was pressuring its stock in the extended session.

The cybersecurity company expects 62 cents to 63 cents in adjusted earnings per share for the fiscal first quarter, along with $2.81 to $2.87 for the full fiscal year. That compares with the 73 cents and $3.33 a share that analysts tracked by FactSet were expecting.

Zscaler's stock (ZS) sank 15% in Tuesday's after-hours trading.

The company's revenue outlook was better, beating the consensus view for the ongoing quarter. Zscaler anticipates $604 million to $606 million in revenue, while analysts were modeling $603 million.

Zscaler's full-year outlook is for $2.60 billion to $2.62 billion in revenue, while analysts were looking for about $2.62 billion. The company's full-year calculated billings forecast is for $3.11 billion to $3.135 billion, whereas the FactSet consensus calls for $3.122 billion. Billings is defined as revenue plus the change in deferred revenue.

Read: PagerDuty's stock falls despite earnings beat, as these factors weigh on outlook

"I'm excited about the year ahead, as we enter fiscal 2025 with a strong go-to-market machine and a high pace of innovation," Chief Executive Jay Chaudhry said in a release.

The profit forecast overshadowed better-than-expected results in the fiscal fourth quarter.

For the latest quarter, Zscaler posted a 30% rise in revenue to $592.9 million. Analysts were expecting $567.5 million.

"Customers' adoption of our Zero Trust Exchange platform is stronger than ever, and I'm thrilled to share that we have achieved a major milestone with our cloud platform surpassing over half a trillion transactions daily," Chaudhry said.

Zscaler also saw its net loss narrow to $14.9 million, or 10 cents a share, compared with $30.7 million, or 21 cents a share, in the year-earlier period. On an adjusted basis, the company posted 88 cents in earnings per share, while analysts were projecting 70 cents.

-Emily Bary

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09-03-24 2004ET

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