Zscaler Stock Is Moving Lower: What's Going On?

Zscaler Inc ZS shares are trading lower Tuesday on the heels of the company's quarterly financial results. Here's a rundown of the print.

• Q1 Revenue: $496.7 million beat estimates of $474.74 million
• Q1 EPS: 67 cents beat estimates of 49 cents

Revenues were up 40% year-over-year. Deferred revenue increased 39% year-over-year to $1.4 billion. Calculated billings grew 34% year-over-year to $456.6 million.

Cash flow from operations totaled $260.8 million in the quarter and the company generated $224.7 million of free cash flow. Zscaler ended the quarter with $2.32 billion in cash, equivalents and short-term investments. 

"We had a strong start to our fiscal year with all key metrics coming above our guidance. We are enabling enterprises to move forward with their key transformative initiatives - Zero Trust and AI - which is driving demand for our Zero Trust Exchange," said Jay Chaudhry, chairman and CEO of Zscaler.

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Guidance: Zscaler sees fiscal second-quarter revenue in the range of $505 million to $507 million versus estimates of $496.67 million. The company expects full-year 2024 revenue of approximately $2.09 billion to $2.1 billion versus estimates of $2.06 billion.

Zscaler anticipates second-quarter adjusted earnings of 57 cents to 58 cents per share versus estimates of 51 cents per share. The company sees full-year adjusted earnings of $2.45 to $2.48 per share versus estimates of $2.24 per share. 

Analyst Changes: Following the print, Needham analyst Alex Henderson maintained Zscaler with a Strong Buy and raised the price target from $210 to $225. Rosenblatt analyst Catharine Trebnick reiterated a Buy rating and maintained a price target of $225. Morgan Stanley analyst Hamza Fodderwala maintained an Equal-Weight rating and raised the price target from $170 to $180.

ZS Price Action: Zscaler shares were down 4.96% at $182.40 at the time of writing, according to Benzinga Pro.

Photo: Kris from Pixabay.