The stock market had a mixed start to the last month of the year, as various major market benchmarks moved in different directions on Thursday. A big hit to a key tech stock component slammed the Dow Jones Industrial Average (^DJI 0.56%) relatively hard, but the Nasdaq Composite (^IXIC -2.05%) managed to post gains for the day, and the S&P 500 (^GSPC -0.88%) finished close to unchanged.


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Most companies have already reported their quarterly earnings, but a select group of tech stocks typically waits until around this point in the quarter to release their latest results. Two more key reports came out late Thursday, and both Zscaler (ZS -2.17%) and Asana (ASAN -1.02%) saw their share prices move lower in response. Below, you'll learn more about what the two tech companies said about business conditions and why shareholders seemed concerned about their immediate prospects.

Zscaler shares drop despite solid growth

Shares of Zscaler were down 11% in after-hours trading on Thursday afternoon. The move wiped out an 8% gain in the regular trading session and came after the cloud-security software provider reported fiscal first-quarter financial results for the period ending Oct. 31 that disappointed some investors.

Zscaler's growth in key financial metrics certainly didn't seem to warrant such a poor reaction from shareholders. Revenue of $355.5 million was up 54% year over year. Adjusted net income more than doubled from year-ago levels to $44.4 million, working out to $0.29 per share, and free cash flow improved to $96 million for the period. Zscaler's calculated billings climbed 37% compared to the same period last year, and deferred revenue topped the $1 billion mark, up 55% from the first quarter of fiscal 2022.

Yet investors didn't seem satisfied with the cloud security provider's outlook for the full 2023 fiscal year. Zscaler expects sales to come in between $1.525 billion and $1.53 billion, which would represent considerable growth from the roughly $1.09 billion that the software company brought in during fiscal 2022. Zscaler also sees profits improving to between $1.23 and $1.25 per share on an adjusted basis, with a considerable bias in billings growth to come in the second half of the year.

Stocks have been volatile recently, particularly in the software-as-a-service space (SaaS). Kneejerk downward reactions can reverse within the same day, so it's hard to draw long-term conclusions about the drop in Zscaler's share price Thursday afternoon.

Asana works for more growth

Asana shares also took a tumble, falling 12% after hours Thursday. Yet many of Asana's fundamental business metrics for the third quarter ending Oct. 31 still seemed strong.

Asana's financial report told somewhat of a mixed story. Revenue for the work-management software platform provider was up 41% year over year to $141 million, with Asana boasting 78% more customers spending at least $100,000 annually on its software, and approaching close to 500 big clients. Dollar-based net-retention rates for those large customers came in above 140%, with overall levels topping the 120% mark.

However, adjusted net losses widened slightly compared to year-ago levels, with the company posting a net loss of $0.26 per share. Cash outflows also worsened significantly from where they were in the same period a year earlier.

Even with the mixed picture, Asana's sales outlook looked upbeat. The company believes revenue should grow 43% in fiscal 2023 to between $541 million and $543 million. Again, though, profits will likely elude the work-management software specialist, as Asana projected adjusted losses of $1.14 to $1.15 per share.

It's been frustrating in 2022 to see stocks do well one quarter and then underperform the next. Nevertheless, the key for Asana will be to get on a clearer path toward making money sooner rather than later in order to appease nervous investors.