Why ZeroFox Shares Are Surging Today?

ZeroFox Holdings Inc ZFOX shares are trading higher by around 10% after it reported better-than-expected Q2 FY24 results and provided above-consensus Q3 guidance.

The company reported revenue of $62.2 million, beating the consensus of $51.82 million, and adjusted EPS loss of $(0.04) exceeded the estimate of $(0.09).

Annual Recurring Revenue came in at $181.8 million. The company ended the quarter with 1,304 subscription customers.

The subscription customers with ARR greater than $100,000 came in at 175, an increase of 35% Y/Y.

Adjusted gross margin stood at 38%, with adjusted subscription gross margin of 72%.

As of July 31, 2023, cash and cash equivalents were $28.8 million.

"We had a very strong quarter with new record highs in quarterly revenue, ARR, subscription customers, large customer adoption, and positive free cash flow for the first time. The strong demand for our external cybersecurity platform reflects the growing need and the trust we are building with our customers as we offer a single, consolidated approach to address cyber threats that are outside the perimeter and beyond the endpoint." said James C. Foster, Chairman and CEO. 

Outlook: ZeroFox expects Q3 revenue of $55.0 million-$57.0 million vs. consensus of $50.37 million.

The company sees an adjusted loss from operations of $(6.2) million-$(5.4) million.

The company expects FY24 revenue of $214.0 million-$217.0 million vs. $200.68 million estimate (prior view $198.0 million-$202.0 million).

The company sees an adjusted loss from operations of $(27.0) million-$(25.0) million versus the prior view of $(28.0) million to $(26.0) million.

Price Action: ZFOX shares are up 10.57% at $1.15 premarket on the last check Wednesday.