Zscaler dips after hours despite cybersecurity firm’s beat-and-raise quarter (NASDAQ:ZS)

Shares of Zscaler (NASDAQ:ZS) on Thursday slipped as much as 12.4% in extended trading, despite the cybersecurity company delivering a beat-and-raise quarter on the back of strong demand for its products.

ZS stock was last down 8.7% to $221.03. It should be noted that shares of the company had jumped more than 26% since its last quarterly report. Expectations were also high going into today’s results, especially in light of larger rival Palo Alto Networks’ (PANW) disappointing guidance last week amid an abrupt change in its strategy.

San Jose, Calif.-based Zscaler (ZS) earned 76 cents per share on an adjusted basis in FQ2 2024 on revenue of $525M. Analysts were expecting the company to earn 58 cents per share on sales of $506.83M. Key revenue metrics calculated billings climbed 27% Y/Y to $627.6M and deferred revenue grew 35% to $1.50B.

Investors could also be disappointed with the sequential quarterly slowdown in Zscaler’s (ZS) revenue metrics. The company in FQ1 had delivered revenue growth of 40%, calculated billings growth of 34% and deferred revenue growth of 39%.

“We delivered strong Q2 results, with billings, revenue and operating profit all coming in above our guidance as customer interest in the Zscaler Zero Trust Exchange platform remains high,” the company’s top boss Jay Chaudhry said in a statement.

The executive was referring to the company’s new cloud security solution announced last month. According to the company, the solution is built upon a new architecture in which business policies determine user and device access instead of legacy network and firewall architectures.

“An increasing number of customers are realizing the shortcomings of traditional firewall-based security and are engaging with us to transform their legacy security to Zero Trust architecture,” Chaudhry added.

Turning to Zscaler’s (ZS) guidance, the company now sees full year fiscal 2024 revenue of about $2.118B to $2.122B, compared to an earlier outlook of $2.09B to $2.10B. The consensus estimate is $2.11B.

Full year calculated billings is now expected to be $2.55B to $2.57B from $2.52B to $2.56B previously. Adjusted earnings per share is now seen to be $2.73 to $2.77 from a prior forecast of $2.45 to $2.48. The consensus estimate is $2.48.

For FQ3, Zscaler (ZS) anticipates earning 64 cents to 65 cents per share on an adjusted basis on revenue of $534M to $536M. Analysts are expecting earnings of 59 cents per share on sales of $530.87M.

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