COVID Tailwinds
The market’s response to the company’s innovative Zero Trust Exchange security service has been encouraging. Overall, demand conditions improved significantly last year as enterprises embraced digital transformation and shifted their workloads to the cloud. Recent cyberattacks that exposed the vulnerability of certain existing digital systems contributed to the high demand for cloud security services. Initially, there was apprehension about the sustainability of the current uptrend, in a market plagued by uncertainty, but Zscaler’s positive financial performance allayed those concerns.
From Zscaler’s Q2 2021 earnings conference call:
“With our Zero Trust Exchange, Zscaler provides secure any-to-any connectivity for users, applications, workloads, and IoT and OT systems regardless of your location. The recent SolarWinds security incident has further elevated the need for a true Zero Trust platform like Zscaler. During such sophisticated attacks, our proxy-based architecture would prevent loss of sensitive data and our application-level segmentation eliminates that whole set movement. We provide users access to applications, not the network, which is fundamentally different from firewalls and legacy network security architecture.”
Well-equipped
The transformation the technology space is currently witnessing has changed the way people protect their digital assets, and security systems designed for new cloud-supported concepts like software-as-a-service and platform-as-a-service are emerging. Zscaler’s advanced and cost-effective solutions like Secure Access Service Edge network and Zero Trust Network Access give it an edge over rivals when it comes to serving the new cloud market.
Moreover, efforts are on to expand the product portfolio in line with changing requirements, to ensure safe app-to-app and cloud-to-cloud communication. Zscaler Cloud Protection, which was rolled out recently, extends on the Zero Trust Exchange.
Impressive Q2 Data
In the second quarter of 2021, the company’s key financial metrics came in above the consensus forecast. At $0.10 per share, adjusted earnings were unchanged from last year but revenues advanced 55% to $157 million, supported by a double-digit increase in billings. That prompted the management to issue strong third-quarter revenue guidance that beat the market’s projection.
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Shares of Zscaler climbed to a record high in early February, ahead of the second-quarter earnings release, but soon entered a downward spiral and slipped to a four-month low last week. The stock traded slightly lower early Monday, after closing the last trading session on a positive note.