What happened
Shares of Zscaler (ZS 6.66%) fell as much as 6% early Wednesday, then settled to trade down around 3% as of 2:40 p.m. ET despite announcing stronger-than-expected fiscal fourth-quarter results (for the period ended July 31, 2023) and encouraging forward guidance.
On the former, quarterly revenue climbed 43% year over year to $719.3 million, translating to adjusted net income of $100.9 million, or $0.64 per share. Analysts, on average, were looking for adjusted earnings of only $0.50 per share on revenue of $431.3 million.
NASDAQ: ZS
Key Data Points
So what
Zscaler saw a healthy 38% year-over-year increase in calculated billings -- a key metric to help gauge future revenue growth. Deferred revenue also climbed 41% to $1.4397 billion. Chairman and CEO Jay Chaudhry noted the company has more than doubled its annual recurring revenue over the past two years, exceeding $2 billion as of the end of this fiscal year.
"With cyber security as a high priority, IT executives are modernizing their legacy network security with our zero-trust architecture," Chaudhry added. "We will continue to invest to delight our customers with more product innovations to capture the large opportunities ahead of us."
Now what
For the first quarter of fiscal 2024, Zscaler expects revenue of $472 million to $474 million, with adjusted net income per share of $0.48 to $0.49. Both ranges were well above analysts' consensus estimates, which called for earnings of $0.45 per share on revenue of $465 million.
For the full fiscal-year 2024, Zscaler anticipates revenue of $2.050 billion to $2.065 billion, calculated billings of $2.52 billion to $2.56 billion, and adjusted net income per share of $2.20 to $2.25. Here again, Wall Street was modeling lower fiscal 2024 earnings of $2.10 per share on revenue of $2.04 billion.
So why the decline today? Zscaler's results were indeed solid, but we should keep in mind shares are up around 44% year to date even after today's dip, and that includes a more than 80% rally over the past four months alone on the heels of Zscaler's equally impressive fiscal Q3 results in May. It seems that even as the long-term bull thesis for this leading cybersecurity stock remains firmly intact, short-term traders are simply taking some of their recent profits off the table today.
