Shares in Zscaler sank Wednesday after fiscal fourth-quarter earnings, revenue and billings topped Wall Street targets. The cybersecurity firm offered a fiscal 2024 outlook for ZS stock above views, though it sees sales growth slowing.
Reporting after the close Tuesday, the San Jose, Calif.-based firm reported earnings of 64 cents a share on an adjusted basis, up 156% from 25 cents a year earlier. In the July quarter, revenue rose 43% to $455 million, the company said.
ZS stock analysts expected earnings of 49 cents per share on sales of $430.4 million. Also, billings rose 38% to $719.3 million, compared with estimates for $660 million.
For fiscal 2024, which starts with the October quarter, Zscaler said it expects earnings in a range of $2.20 to $2.25, ahead of estimates for $2.11 a share.
Zscaler expects revenue in a range of $2.05 billion to $2.065 billion. Analysts had predicted revenue of $2.05 billion. Based on Zscaler's outlook, sales growth would slow to around 27% in fiscal 2024, from 48% in fiscal 2023.
ZS Stock: 'Baking In' Conservatism
"It's clear management is baking in an extra layer of conservatism," Evercore ISI analyst Peter Levine said in a note to clients.
In his note to clients, RBC Capital analyst Matthew Hedberg said: "Zscaler delivered a strong finish to their fiscal year with a beat across the board as fiscal 2024 guidance is above consensus,"
ZS stock initially climbed on the earnings release. But on the stock market today, ZS stock fell 2.7% to close at 158.35. Prior to the Zscaler earnings release, the cybersecurity stock had gained 41% in 2023.
Heading into the Zscaler earnings report, shares clawed back above the 50-day moving average. Also, ZS stock owned a Relative Strength Rating of 86 out of a best-possible 99, according to IBD Stock Checkup.
Zscaler provides cloud-based cybersecurity services via 150 data centers worldwide Zscaler's web security gateways inspect customers' data traffic for malware. Further, the Zscaler Private Access, or ZPA cloud service, replaces virtual private networks, or VPNs, to support remote work.
Palo Alto Networks and Microsoft are Zscaler rivals.
