Latest news with #ZscalerInc
Yahoo
3 days ago
- Business
- Yahoo
BofA Raises Zscaler's (ZS) PT to $340 Amid Rising Platform Adoption
Zscaler Inc. (NASDAQ:ZS) is one of the 10 best growth stocks to buy according to billionaires. On June 9, Bank of America analyst Tal Liani raised his price target on Zscaler to $340 from $285, while maintaining a Buy rating, following the company's CEO, Jay Chaudhry's, presentation at the Bank of America's 2025 Global Technology Conference (GTC). The analyst highlighted sustained customer demand and increasing platform adoption as key factors contributing to the higher valuation. A computer engineer analyzing a server network for cyber security threats. On June 5, management highlighted several positive trends during the GTC event. In the last quarter, over 70% of new annual contract value (ACV) came from upselling to existing clients, while new logo ACV grew 40% year-over-year. Zscaler Inc. (NASDAQ:ZS) is expanding its reach beyond core secure web gateway services, with strong traction in data security and Agentic operations now representing nearly $1 billion in annual recurring revenue (ARR). Notably, data security alone accounted for $350 million in ARR last quarter. Its recent acquisition of Airgap Networks highlights a deeper investment in cybersecurity advancements. While competition and pricing pressure remain, Zscaler's product differentiation and focus on efficiency appear to be supporting its growth outlook. In Liani's view, rising demand for Zero Trust solutions justifies a higher multiple, primarily as Zscaler executes well on both innovation and customer expansion. Zscaler Inc. (NASDAQ:ZS) is a provider of cloud-based cybersecurity solutions. Its Zero Trust architecture ensures secure connections between users, devices, and applications, regardless of location. While we acknowledge the potential of ZS as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money. Disclosure: None.
Yahoo
30-05-2025
- Business
- Yahoo
Zscaler Inc (ZS) Q3 2025 Earnings Call Highlights: Strong Growth Amid Economic Challenges
Revenue: $678 million, up 23% year over year and 5% sequentially. Annual Recurring Revenue (ARR): Approximately $2.9 billion, representing 23% year-over-year growth. Remaining Performance Obligations (RPO): $4.978 billion, up 30% year over year. Calculated Billings: $785 million, up 25% year over year. Gross Margin: 80.3%, compared to 81.4% in the year-ago quarter. Operating Margin: Approximately 22%, comparable year over year. Free Cash Flow Margin: 18%, including data center CapEx at 11% of revenue. Cash and Cash Equivalents: Approximately $3 billion. Guidance for Q4 Revenue: $705 million to $707 million, reflecting approximately 19% year-over-year growth. Full-Year Fiscal 2025 Revenue Guidance: $2.659 billion to $2.661 billion, reflecting approximately 23% year-over-year growth. Full-Year Fiscal 2025 Free Cash Flow Margin Guidance: Approximately 25.5% to 26%. Warning! GuruFocus has detected 4 Warning Sign with ZS. Release Date: May 29, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Zscaler Inc (NASDAQ:ZS) achieved its best Q3 with TCV bookings of over $1 billion and remaining performance obligations nearing $5 billion. The company reported a strong year-over-year growth in new logo ACV of over 40% and total new ACV up double digits. Zscaler Inc (NASDAQ:ZS) maintained a robust annual recurring revenue (ARR) of approximately $2.9 billion, marking the third consecutive quarter of 23% year-over-year growth. The company's free cash flow margin of 28% combined with a 24% revenue growth resulted in a Rule of 52 performance, surpassing the industry benchmark of Rule of 40. Zscaler Inc (NASDAQ:ZS) continues to expand its platform with significant growth in Zero Trust Everywhere, Data Security Everywhere, and Agentic Operations, with these categories approaching $1 billion in ARR. The macroeconomic environment remains challenging, with ongoing economic uncertainty causing customers to be cautious about IT spending. Zscaler Inc (NASDAQ:ZS) faces increased scrutiny of large deals, which could impact the timing and closure of significant contracts. The company's total gross margin decreased to 80.3% from 81.4% in the year-ago quarter, influenced by the introduction of new products optimized for faster go-to-market rather than margins. There is potential variability in the dollar-based net retention rate due to the company's success in selling bigger bundles and faster upsells, which could affect future metrics. The acquisition of Red Canary, valued at $675 million, is expected to be largely neutral to FY26 consensus operating margin, indicating limited immediate financial benefit. Q: How does Zscaler manage the expanding product portfolio and ensure sales focus, especially with the introduction of Z-Flex? A: Jay Chaudhry, CEO, explained that Zscaler uses a two-tier model where the core sales team covers all products with an account-centric approach, while specialized take-off teams focus on newer product areas. Z-Flex, a flexible purchasing program, evolved from customer demand for modularity and flexibility, allowing them to try and swap modules without repeated procurement cycles. The program has already contributed over $65 million in TCV bookings in its first quarter. Q: How is the macroeconomic environment affecting Zscaler's business, and what trends are being observed? A: Jay Chaudhry noted that while the overall spending environment remains challenging with tight budgets, cybersecurity, particularly Zero Trust architecture and AI security, remains a priority. Zscaler did not experience a softer April, likely due to not selling security appliances. The company continues to work closely with customers to reduce costs and become a strategic partner, translating into ARR growth. Q: Can you explain the structure and impact of Z-Flex deals on Zscaler's financial metrics? A: Remo Canessa, CFO, stated that Z-Flex deals are structured to provide customers with flexibility in adopting and swapping modules at predetermined pricing, reducing procurement cycles. These deals are typically longer in duration, moving from three to four or five years. Zscaler plans to transition from billing to ARR as a primary metric in fiscal '26, which aligns with the flexibility offered by Z-Flex. Q: How does the acquisition of Red Canary fit into Zscaler's strategy, and what benefits does it bring? A: Jay Chaudhry highlighted that Red Canary accelerates Zscaler's vision to become a leading player in the SOC market. The acquisition brings experienced detection and threat intel engineers, sophisticated agentic AI technology, and a seasoned go-to-market team. This complements Zscaler's existing data-fabric technology and enhances its security operations solutions. Q: What role does branch connector play in new customer wins, and how is it contributing to Zscaler's growth? A: Jay Chaudhry explained that the branch connector, now a plug-and-play appliance, simplifies branch infrastructure by integrating Zero Trust Branch connectivity and device segmentation. It has been instrumental in attracting new customers, with 59% of Zero Trust Branch buyers being new logos. The solution addresses customer pain points by eliminating the need for multiple legacy network devices. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Washington Post
29-05-2025
- Business
- Washington Post
Zscaler: Fiscal Q3 Earnings Snapshot
SAN JOSE, Calif. — SAN JOSE, Calif. — Zscaler Inc. (ZS) on Thursday reported a loss of $4.1 million in its fiscal third quarter. The San Jose, California-based company said it had a loss of 3 cents per share. Earnings, adjusted for one-time gains and costs, were 84 cents per share.
Yahoo
28-05-2025
- Business
- Yahoo
Should You Invest in the Global X Cloud Computing ETF (CLOU)?
Launched on 04/12/2019, the Global X Cloud Computing ETF (CLOU) is a passively managed exchange traded fund designed to provide a broad exposure to the Technology - Cloud Computing segment of the equity market. Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors. Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Cloud Computing is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%. The fund is sponsored by Global X Management. It has amassed assets over $341.10 million, making it one of the average sized ETFs attempting to match the performance of the Technology - Cloud Computing segment of the equity market. CLOU seeks to match the performance of the INDXX GLOBAL CLOUD COMPUTING INDEX before fees and expenses. The Indxx Global Cloud Computing Index provides exposure to exchange-listed companies in developed and emerging markets that are positioned to benefit from the increased adoption of cloud computing technology. Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same. Annual operating expenses for this ETF are 0.68%, making it one of the more expensive products in the space. It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis. Looking at individual holdings, Snowflake Inc-Class A (SNOW) accounts for about 5.50% of total assets, followed by Zscaler Inc (ZS) and Twilio Inc - A (TWLO). The top 10 holdings account for about 44.53% of total assets under management. The ETF has lost about -5.01% so far this year and was up about 14.20% in the last one year (as of 05/28/2025). In that past 52-week period, it has traded between $18.22 and $26.34. The ETF has a beta of 1.14 and standard deviation of 30.01% for the trailing three-year period. With about 39 holdings, it has more concentrated exposure than peers. Global X Cloud Computing ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, CLOU is an excellent option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well. WisdomTree Cloud Computing ETF (WCLD) tracks BVP NASDAQ EMERGING CLOUD INDEX and the First Trust Cloud Computing ETF (SKYY) tracks ISE Cloud Computing Index. WisdomTree Cloud Computing ETF has $396.97 million in assets, First Trust Cloud Computing ETF has $3.40 billion. WCLD has an expense ratio of 0.45% and SKYY charges 0.60%. To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Global X Cloud Computing ETF (CLOU): ETF Research Reports Snowflake Inc. (SNOW) : Free Stock Analysis Report Twilio Inc. (TWLO) : Free Stock Analysis Report First Trust Cloud Computing ETF (SKYY): ETF Research Reports Zscaler, Inc. (ZS) : Free Stock Analysis Report WisdomTree Cloud Computing ETF (WCLD): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
27-05-2025
- Business
- Globe and Mail
Zscaler to Post Q3 Earnings: Time to Buy, Sell or Hold the Stock?
Zscaler ZS is scheduled to report its third-quarter fiscal 2025 results on May 29, 2025. Zscaler anticipates revenues between $665 million and $667 million for third-quarter fiscal 2025. The Zacks Consensus Estimate for ZS' fiscal third-quarter revenues is pegged at $666.1 million, indicating year-over-year growth of 20.4%. For the fiscal third quarter, the company expects non-GAAP earnings per share in the band of 75-76 cents. The Zacks Consensus Estimate for ZS' fiscal third-quarter earnings is pegged at 75 cents per share, which remained unchanged over the past 60 days and indicates a year-over-year decline of 14.8%. Zscaler's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 24.55%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.) Zscaler, Inc. Price and EPS Surprise Zscaler, Inc. price-eps-surprise | Zscaler, Inc. Quote Earnings Whispers for Zscaler Our proven model does not conclusively predict an earnings beat for Zscaler this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can see the complete list of today's Zacks #1 Rank stocks here. Though Zscaler currently carries a Zacks Rank #3, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. Factors to Note for Zscaler's Q3 Results Zscaler's third-quarter results are expected to show sustained demand for its security and networking solutions, given the persistent expansion of the global security space. The adoption of ZS' in-cloud security solution, Zero Trust Exchange, driven by the ongoing digital transformation across organizations and the growing popularity of hybrid work, is likely to have been a key catalyst. The growing adoption of Software-Defined Wide Area Network (SD-WAN) solutions might have acted as a primary driver in the fiscal third quarter. Per the latest Future Market Insights report, the market size for SD-WAN solutions and products is expected to reach $80.91 billion by 2034 from $5.36 billion in 2024, witnessing a CAGR of 31.6%. As only a select number of vendors offer security and SD-WAN solutions, Zscaler has been gaining from the increasing opportunities in this space. The company's partnerships with VMware and Silver Peak have enabled it to secure SD-WAN deliveries. This is expected to have aided Zscaler's fiscal third-quarter performance. ZS' existing core products, mainly the Zscaler Internet Access and Zscaler Private Access, have been driving customer retention. The addition of new features to its Zero Trust Exchange, such as Cloud Access Security Broker, Cloud Browser Isolation, Cloud Protection, Zscaler Digital Experience and Cloud Security Posture Management for software-as-a-service applications, is expected to have driven its product portfolio expansion and customer acquisition. Generative AI and Agentic AI are also acting as a growth pillar for Zscaler. The company now serves 14 out of 15 U.S. cabinet-level agencies. This is likely to have provided stability to Zscaler's top line in the to-be-reported quarter. Our model estimates for third-quarter revenues from Channel Partners and Direct Customers are pegged at $588 million and $77.4 million, respectively. We expect the remaining performance obligation at the end of the quarter to be approximately $4.65 billion. However, as customers scrutinize large deals more closely, with continued tight IT budgets, Zscaler faces longer deal cycles. To counter this, Zscaler is growing investments to improve sales and marketing (S&M) capabilities and higher research and development (R&D) costs, which might have weighed on the company's fiscal third-quarter bottom line. ZS Price Performance & Stock Valuation Zscaler's shares have gained 40.9% year to date, outperforming the Zacks Security industry's growth of 16.9%. The stock has also outperformed its peers in the cloud-based security solution space, such as Palo Alto Networks PANW, CrowdStrike Holdings CRWD and CyberArk Software CYBR, which have risen 2.7%, 33.2% and 14.5%, respectively, in the same time frame. Now, let's look at the value Zscaler offers investors at the current levels. ZS stock is trading at a discount with a forward 12-month P/S of 12.79X compared with the industry's 14.21X, reflecting an undervaluation. Investment Thesis for Zscaler Zscaler is benefiting from the rising demand for cybersecurity solutions due to the slew of data breaches. The increasing demand for privileged access security in digital transformation and cloud migration strategies is a key growth driver. A strong presence across verticals, such as banking, insurance, healthcare, public sector, pharmaceuticals, telecommunications services and education, safeguards it from the negative impacts of ongoing macroeconomic headwinds. Portfolio expansion through acquisitions like Avalor, Canonic Security and ShiftRight is praiseworthy. However, Zscaler faces intense competition from other established cybersecurity players, including Palo Alto Networks, CyberArk and CrowdStrike. Zscaler Internet Access and Private Access face competition from Palo Alto Networks Prisma Access, Prisma SD-WAN, CrowdStrike Falcon Zero Trust, CyberArk Secure Web Sessions and CYBR Identity Security Platform. To survive in the highly competitive cybersecurity market, Zscaler is continuously investing in broadening its capabilities. Over the past few years, Zscaler has invested heavily to enhance its S&M capabilities, particularly by increasing the sales force. Unfortunately, its aggressive investment in S&M and R&D might weigh on its near-term profitability. Conclusion: Hold ZS Stock for Now While the long-term prospects for the company remain bright, the near-term challenges associated with its profit growth warrant caution. Therefore, we believe that it's prudent to avoid making new investments in the stock for now. For existing shareholders, holding on to Zscaler stock is the best course of action, as the long-term growth drivers are still firmly in place. Zacks Names #1 Semiconductor Stock It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom. With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028. See This Stock Now for Free >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Palo Alto Networks, Inc. (PANW): Free Stock Analysis Report CyberArk Software Ltd. (CYBR): Free Stock Analysis Report Zscaler, Inc. (ZS): Free Stock Analysis Report CrowdStrike (CRWD): Free Stock Analysis Report
