Zscaler stock tumbled after the cybersecurity firm reported fiscal fourth-quarter earnings, revenue and billings that beat estimates but fiscal 2025 guidance underwhelmed investors amid big changes in its sales organization.
"Zscaler delivered a good finish to the fiscal year with a beat across the board while fiscal 2025 guidance was a bit mixed," said RBC Capital analyst Matthew Hedberg in a report.
At Jefferies, analyst Joseph Gallo said in a report: "Fiscal Q4 billings growth of 27% versus consensus 24% was overshadowed by first half 2025 guide of 13% year-over-year...Guidance justifiably amplifies competitive and total addressable market penetration questions."
Reported after the market close on Tuesday, Zscaler earnings rose 37% to 88 cents a share from a year earlier on an adjusted basis. Revenue climbed 30% to $592.9 million, the San Jose, Calif.-based firm said.
Zscaler stock analysts expected earnings of 70 cents per share on sales of $567.5 million.
Also, fiscal Q4 billings rose 27% to $910.8 million, compared with estimates for $892.5 million.
Zscaler Stock: Guidance Underwhelms
For the current quarter, Zscaler said it expects revenue of $605 million at the midpoint of guidance, versus estimates of $603 million.
For fiscal 2025, which starts with the current October-ending quarter, Zscaler forecast EPS of $2.84, well below estimates of $3.33. Zscaler predicted revenue of $2.61 billion, slightly below estimates of $2.62 billion.
"According to management, fical 2025 is a year of sales transition," said BMO Capital Markets analyst Keith Bachman in a report. "Nevertheless, we are encouraged by Zscaler's expanding platform, increasing contributions from newer products, and growing cohorts of large customers."
On the stock market today, Zscaler stock fell 17.7% to near 159 in afternoon trading.
Zscaler Stock: Sales Shake-Up
Zscaler has brought in a new chief revenue officer, chief marketing officer and other top sales staff as its go-to-market strategy undergoes big changes. Analysts have lowered consensus estimates amid the sales organization overhaul.
Heading into the Zscaler earnings release, the cybersecurity stock had retreated 10% in 2024. Also, ZS stock had a Relative Strength Rating of 69 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 cloud service replaces virtual private networks to support remote work.
Zscaler competes with Palo Alto Networks and Microsoft as well as well-funded startup Wiz.
Meanwhile, Zscaler stock belongs to the IBD Computer-Software Security group, which ranks No. 150 out of 197 groups tracked.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
