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Zscaler Stock Poised to Rise on Accelerating Revenue Growth, Guidance -Breaking


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By Daniel Shvartsman – Zscaler’s stock (NASDAQ:) is poised to open higher after the cyber-security software provider posted an earnings beat.

Zscaler reported $230.5M in revenue for their quarter ended October 31, 62% above last year’s numbers, their strongest year-over-year growth quarter since coming public in 2019. Non-GAAP income was $.14/share. Both numbers were above analyst expectations.

CEO and Chairman Jay Chaudhry said, “CISOs and CIOs are looking to phase out legacy network security in favor of zero trust architecture, due to increasing cyber and ransomware risks and accelerating digital transformation. This architecture shift continues to drive strong demand for our Zero Trust Exchange platform.” He also reported the company crossed the $1B annual recurring revenue (ARR) mark, with a focus on reaching $5B over time.

Zscaler shares traded up 7% in pre-market trading at $371/share. Investors might be looking at both billings and guidance numbers for promising signals about the security company. Billings increased 71% in the past year, more than revenue. Zscaler’s guidance for Q2 2022 (their fiscal year runs August-July) is for $240-242M revenue and $.11/share non-GAAP net income. From $930-950M to $1.23-1.25B, their full-year guidance has been raised to $1B in revenues and $1.3B per billings. The current analyst forecasts for Q2 include revenue of $225M.

JMP Securities and Morgan Stanley are two of the sell-side companies that raised their Zscaler price targets to $330/share and $400/share, respectively in response to this report. Twelve analysts raised their price targets to reflect the beat and increase, along with the acceleration of growth in this quarter.

Crowdstrike is now up 2% (NASDAQ:), possibly out of sympathy. But, this high-flying security company has dropped 25% since its 52 week highs due to valuation worries.

(Published at 5:50 AM ET; updated at 7.50 AM ET.

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