Zscaler’s Q2 results beat market estimates

Zscaler Inc. (NASDAQ: ZS) beat revenue and earnings estimates for the second quarter of 2020 but the outlook fell below estimates, causing the stock to crash by more than 10% in aftermarket hours on Thursday.

The cloud security company reported a 36% year-over-year increase in total revenue to $101.3 million, beating forecasts of $98.9 million.  

GAAP net loss was $29.2 million, or $0.23 per share, compared to $3.6 million, or $0.03 per share, in the prior-year period. Adjusted net income totaled $12 million, or $0.09 per share, surpassing projections of $0.03 per share.

Calculated billings grew 18% to $135.4 million and deferred revenue increased 36% to $280 million compared to last year.

For the third quarter of 2020, the company expects total revenue of $105-107 million and adjusted EPS of approx. $0.01-0.03. This fell short of Wall Street’s estimates of $0.04 per share for the third quarter.

For the full year of 2020, revenue is expected to be $414-417 million and adjusted EPS is expected to be $0.14-0.16. Calculated billings is estimated to range between $512-517 million.

Zscaler has been strengthening its product portfolio to keep pace with industry leaders like Cisco (CSCO) while giving competition to peers. As a result, the company continues to expand its user-base. More and more businesses, including top-tier companies, are adopting Zscaler’s cloud security solutions.

According to Allied Market Research, the global cloud security market is expected to grow to $8.9 billion by 2020, reflecting a CAGR of 23.5% during the period from 2015-2020.  

Last month, Zscaler reached an agreement with Broadcom (NASDAQ: AVGO), resulting in the dismissal of all patent lawsuits filed against Zscaler by Symantec, which was acquired by Broadcom. As part of the settlement, Zscaler agreed to pay $15 million to Broadcom.

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