What happened

Zscaler (NASDAQ:ZS) stock popped 11.6% in June, according to data from S&P Global Market Intelligence. The S&P 500 returned 2% last month.

In 2020, shares of the cloud-based security company (which held its initial public offering or IPO in March 2018) have gained 137% through Thursday, July 2. The S&P 500 fell 2.1% over this period. 

White image of a padlock on a semiconductor -- concept for cybersecurity.

Image source: Getty Images.

So what

We can attribute Zscaler stock's solid June performance largely to continued momentum from late May, when the company released powerful fiscal third-quarter 2020 results.

Shares soared more than 29% the day after the release, May 29, and moved up more than 12% on June 1.

As I wrote last month:

In Q3, revenue surged 40% year over year to $110.5 million, driven by Zscaler Private Access usage increasing over 10 times. The company is benefiting from the huge rise in the number of people working from their homes following shelter-in-place orders instituted throughout much of the world in March to help slow the spread of COVID-19. Employers need to make sure all the folks working from home have secure means of remotely accessing the internet and business applications they need to do their jobs. 

On the basis of generally accepted accounting principles (GAAP), Zscaler recorded a net loss of $19.3 million, or $0.15 per share, versus a net loss of $12.2 million, or $0.10 per share, in the year-ago period.

Adjusted for one-time items, ... earnings per share (EPS) jump[ed] 40% to $0.07. This result trounced the Wall Street consensus estimate of $0.02.

Now what

CEO Jay Chaudhry said in the earnings release, "The digital transformation that is driving our business is further accelerating, and we believe the Zscaler cloud security platform is best positioned to help our customers thrive no matter where their teams are working." In other words, management doesn't view the tailwind from the pandemic as a short-term phenomenon. 

For fiscal 2020, management expects revenue of $422 million to $424 million, representing growth of about 40% year over year. It also expects adjusted EPS of $0.20 to $0.21, a slight contraction from $0.22 last year.

As is typical for a tech company relatively new to the public markets, Zscaler is investing in growth initiatives. That's why management doesn't expect the company's bottom line to grow, even though it projects strong top-line growth.