Zscaler earnings and forecast blow by expectations, but stock dips in after-hours trading
By Jeremy C. Owens
Cloud-security company's stock has more than tripled in past three months, revenue expected to grow roughly 35% in new fiscal year after 42% growth in the past year
Zscaler Inc. wrapped up its fiscal year by topping all expectations with its fourth-quarter performance and forecast for its new fiscal year, but shares still sank a bit in late trading after a huge push amid pandemic-influenced demand.
Zscaler (ZS) is a security-software offering focused on the cloud, which has made it a popular offering for companies suddenly moving to cloud architecture to support workers who were sent home during the COVID-19 pandemic. Investors have jumped on the stock, which entered the public markets in 2018 (https://www.marketwatch.com/story/zscaler-ipo-five-things-to-know-about-the-first-big-tech-ipo-of-2018-2018-03-14), and it has more than tripled in the past six months.
Zscaler on Wednesday afternoon reported fiscal fourth-quarter losses of $45.9 million, or 38 cents a share, on sales of $125.9 million, up from $86.1 million a year ago. After adjusting for stock-based compensation and other factors, Zscaler reported earnings of 5 cents a share, down from adjusted earnings of 7 cents a share a year ago.
Zscaler also reported $194.9 million in billings, an important metric for many software companies that reflects expected long-term revenue under contracts signed during the quarter. Analysts on average expected Zscaler to report adjusted earnings of 3 cents a share on sales of $118.6 million and billings of $175.2 million.
For the full year, Zscaler revenue grew 42% to $431.3 million, while adjusted earnings grew to 24 cents a share from 22 cents a share. For the new fiscal year, which began in August, Zscaler guided for revenue growth of roughly 35%, predicting adjusted earnings of 28 cents to 30 cents a share on sales of $580 million to $590 million and billings of $710 million to $720 million. Analysts on average were projecting adjusted earnings of 28 cents a share on sales of $556.1 million and billings of $669.4 million.
Zscaler shares dipped between 1% and 4% in after-hours trading immediately following the release of the report, after closing with a 0.8% increase at $134.19. The share price has grown almost 190% so far this year, as the S&P 500 index has returned 4.5%.
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September 09, 2020 16:19 ET (20:19 GMT)
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