Shares in Zscaler Inc. fell 14% in late trading today after the cloud security company forecasted a lower-than-expected full-year outlook alongside solid figures for its fiscal fourth quarter.
For the quarter ended July 31, Zscaler reported adjusted earnings per share of 88 cents, up from 64 cents per share in the same quarter of the previous year, on revenue of $592.9 million, up 30% year-over-year. Both were beats, as analysts had expected adjusted earnings of 70 cents per share on revenue of $567.46 million.
The company posted adjusted income from operations of $127.5 million,or 22% of revenue, in the quarter, up from $86 million, or 19% of revenue, a year ago. Cash provided by operations came in at $203.6 million, up from $135.9 million the year prior and as of the end of July, Deferred revenue rose 32%, to $1.895 billion, and it had $2.41 billion in cash, cash equivalents and short-term investments on hand.
Highlights in the quarter included Zscaler signing a strategic alliance with Google LLC to enhance secure application access, data protection and insights for enterprise customers using Chrome Enterprise, Google Workspace and Google Security Operations. The partnership sees Google Chrome Enterprise integrating with Zscaler Private Access to enhance security through leveraging device posture and user identity signals while ensuring secure access to corporate resources through Chrome Enterprise browsers.
Zscaler will also be integrating with Google Workspace to enable stricter control over sensitive emails and documents, preventing data exfiltration through data loss prevention tools and supporting tenant restrictions and data classification. Additionally, Zscaler will work with Google Security Operations to provide actionable security insights within a unified platform to improve threat detection and response capabilities.
Through the quarter, Zscaler also announced new innovations to its artificial intelligence data protection capabilities that enhance the company’s solution to protect structured and unstructured data in motion, at rest and in use and data across online channels.
For its full 2024 fiscal year, Zscaler reported adjusted earnings per share of $3.19, up from $1.79 the year prior, on revenue of $2.168 billion, up 34% year-over-year.
“We ended a successful fiscal 2024 with Q4 results exceeding the high end of our guidance across all metrics,” Chairman and Chief Executive Jay Chaudhry said in the company’s earnings release.
For its fiscal 2025 first quarter, Zscaler expects adjusted earnings per share of 62 to 63 cents on revenue of $604 million to $606 million. The revenue outlook was below the 73 cents per share expected by analysts, while revenue was a slight beat versus an expected $603 million.
For the full fiscal year, the company forecast adjusted earnings per share of $2.81 to $2.87 on revenue of $2.61 billion at the midpoint. Both were misses, as analysts had been looking for a forecast of $3.01 per share on revenue of $2.62 billion.
Sam Curry, chief information security officer at Zscaler, spoke with theCUBE, SiliconANGLE Media’s livestream studio, in August, when he discussed the role of leadership in cybersecurity innovation: