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Why Zscaler Stock Soared Today

By Joe Tenebruso - May 26, 2021 at 6:58PM

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The cloud security leader is expanding at a rapid pace.

What happened

Shares of Zscaler (ZS 0.55%) surged 12.4% on Wednesday after the cybersecurity company delivered strong third-quarter financial results. 

So what

Zscaler's revenue soared 60% year over year to $176.4 million, as more businesses migrated their operations to the cloud during the pandemic. Its adjusted net income, in turn, more than doubled to $21.4 million, or $0.15 per share.

A digital shield.

Zscaler's cloud security solutions are in high demand. Image source: Getty Images.

"Our Zero Trust Exchange platform is helping customers realize their digital transformation goals and architect for the new normal of the work-from-anywhere economy," CEO Jay Chaudhry said in a press release.

Better still, Zscaler continued to crank out cash. Its operating and free cash flow increased 253% and 513%, respectively, to $73.4 million and $55.8 million.

Now what

Management is guiding for revenue of $185 million to $187 million in the fourth quarter, with adjusted operating income and earnings per share of $13.5 million to $14.5 million and $0.08 to $0.09, respectively.

Even as more people begin to return to their work offices, as the coronavirus crisis subsides, the shift to the cloud is likely to persist. And with cyber hacks increasing in scale and sophistication, demand for Zscaler's cybersecurity tools should remain strong in the coming quarters.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Zscaler. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Zscaler Stock Quote
Zscaler
ZS
$175.31 (0.55%) $0.96

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