What happened

Shares of Zscaler (ZS -4.36%) rose 3.2% in September, according to data provided by S&P Global Market Intelligence. While that might not sound like a lot, it's significantly better than the S&P 500's 9.3% decline and the 10.5% plunge in the Nasdaq Composite. Several factors helped the cloud-based cybersecurity stock outshine the broader stock market indexes last month. 

So what

Zscaler reported its fourth-quarter and fiscal 2022 financial results in early September. They were excellent in every way. Revenue rocketed 61% year over year in the fourth quarter to $318.1 million. Meanwhile, free cash flow came in at 24% of revenue, a considerable increase from 14% in the year-ago period. For the full year, revenue surged 62% to nearly $1.1 billion, while free cash flow was $231.3 million, pushing its cash balance to over $1.7 billion. 

The company expects to continue growing briskly in its 2023 fiscal year. It sees revenue rising to between $1.49 billion and $1.5 billion, implying nearly 38% growth. 

Zscaler also continues to expand its capabilities to better serve customers. It announced deeper integrations with fellow cloud security company CrowdStrike (CRWD -1.32%) to enable superior threat protection. As a result, customers of both platforms have unparalleled endpoint and network visibility to identify new threats. That should enhance their ability to win, retain, and expand customer relationships. 

Meanwhile, Zscaler put some of its financial flexibility to work, agreeing to acquire ShiftRight, a leader in closed-loop security workflow automation. The acquisition will strengthen its cloud security platform, further enhancing its ability to win, retain, and expand its customer relationships. 

Zscaler's strong showing caught the attention of analysts. Truist analyst Joel Fishbein put out a note stating that it had delivered "another impressive beat" on the top and bottom lines, which came amid a challenging economic environment. Those numbers led Needham analyst Alex Henderson to raise that firm's price target on Zscaler's stock from $185 to $210 a share while maintaining a "strong buy" rating. Citigroup analyst Fatima Boolani also raised her price target, moving it from $200 to $225 a share following the company's financial results. Meanwhile, MKM Partners initiated coverage on the stock, setting a $225 price target and giving shares a buy rating. 

Now what

Zscaler is capitalizing on the growing need for cloud security services. The company sees a lot more growth ahead as it brings more customers onto its platform and expands those relationships by providing enhanced services. While shares outperformed last month, they're down sharply in the past year. Because of that, the stock could have a lot of upside ahead as Zscaler continues growing.