This has been a terrible year for the Nasdaq Composite (^IXIC +0.18%) so far, sending the index into a bear market. Yet at least this week, investors have been more upbeat about the Nasdaq's prospects. As of 12:30 p.m. ET today, the index was up nearly 2.5%, leading other major market benchmarks higher on the day.
Earnings season has been brutal for many key stocks listed on the Nasdaq, adding to the dour mood on Wall Street year to date. Today, though, investors were celebrating solid financial results from Autodesk (ADSK +0.06%) and Zscaler (ZS +1.38%). Below, we'll look more closely at both reports to see why shareholders were excited about the two tech companies' prospects.
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Autodesk designs a strong quarter
Shares of Autodesk were up more than 9% at midday on Friday. The maker of computer-aided design (CAD) software and other products for technical professionals reported ongoing growth in its first-quarter financial report.
Revenue grew 18% year over year to $1.17 billion. Most of those sales came from its design segment, which saw a 16% rise from year-ago levels. All but about $80 million of that came from subscription plans, which points to the success Autodesk has had in pushing its customers to embrace the cloud. The software company's gains also showed up on the bottom line, with adjusted earnings of $1.43 per share up nearly 40% compared to the first quarter of last year.
NASDAQ: ADSK
Key Data Points
Autodesk believes that the strength in its business should last throughout the year. For the current fiscal year, the company sees revenue rising by 13% to 15% to between $4.96 billion and $5.06 billion. It expects even faster growth in billings (between 18% and 21%), and full-year adjusted earnings of $6.43 to $6.66 per share would make the current stock valuation look more attractive.
Wall Street analysts weren't certain about the company's prospects coming into the latest financial report, causing some consternation among shareholders. But the actual results from Autodesk paint a pretty picture of its future, and investors are hopeful now that the company can keep growing from here.
Zscaler scales up
Elsewhere, Zscaler's stock rose an even sharper 11%. The cybersecurity specialist gave investors a lot of what they wanted to see in its latest financial report.
Results for the fiscal third quarter, ending April 30, featured continued strong growth. Revenue jumped 63% to $287 million, with 54% growth in calculating billings to $346 million. Adjusted net income moved higher by 15% to $24.7 million, producing adjusted earnings of $0.17 per share.
NASDAQ: ZS
Key Data Points
Zscaler also boosted its full-year expectations. The company now sees sales of $1.078 billion, with adjusted earnings likely to come in between $0.64 and $0.65 per share. The revenue projection was about 7% higher than before, while earnings projections were 20% to 30% above previous guidance.
Few investors doubt that its cloud security products will see reduced demand anytime in the immediate future. With the stock price still down by more than half from recent highs, upward momentum could take Zscaler quite a bit higher if it continues to grow at this pace.
