Zscaler (ZS) reported second-quarter earnings and revenue that beat Wall Street targets. But Billings growth was only marginalized by analyst estimates, and ZS stock plummeted on the news on Friday.
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The cybersecurity company released its earnings report after the market close on Thursday. Zscaler announced a reorganization and downsizing to streamline operations.
For the quarter ended Jan. 31, Zscaler’s earnings on an adjusted basis were 37 cents a share, up 184% year over year. Revenue soared 52% to $387.6 million, the San Jose, Calif.-based company said.
Analysts expected Zscaler to earn 29 cents a share on revenue of $364.7 million. Billings also rose 34% to $493.8 million, compared to estimates of $491.5 million.
“Zscaler delivered a good quarter on paper, but billing growth of 34% fell short of investor expectations as delayed and slower transactions again weighed on growth in the quarter,” UBS analyst Roger Boyd said in a note to clients .
ZS Stock: Increasing Competition in Palo Alto?
ZS shares plunged 12.7% to nearly 117 in early trading today in the stock market.
For full-year 2023, Zscaler is forecasting billings of $1.94 billion at the midpoint of its outlook, slightly above estimates of $1.93 billion.
“Although customers continue to employ increased levels of deal scrutiny and lengthening sales cycles, ZS is finding that deals are not going away,” TD Cowen analyst Shaul Eyal said in a note.
Some analysts point to increased competition for Zscaler Palo Alto Networks (PANW).
Zscaler offers cloud-based cybersecurity services through 150 data centers worldwide.
Heading to the Zscaler earnings report, ZS stock held a relative strength rating of 18 out of a best possible 99, according to the IBD Stock Checkup.
Follow Reinhard Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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