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Zscaler Reports Higher Expenses, Leaves Billing Guidance Unchanged

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Key Takeaways

  • Zscaler Inc., a cloud-based cybersecurity company, beat profit and sales estimates, but its expenses soared and the company kept its full-year billing guidance unchanged.
  • Zscaler said it faced additional costs for its go-to-market and research and development (R&D) organizations.
  • Zscaler shares initially fell Tuesday after the news, but recovered by midday.
Zscaler Inc. () shares initially declined before reversing their course in trading Tuesday after the cloud-based cybersecurity provider said its costs rose and it opted not to revise upward its billings guidance.

The company reported fiscal first-quarter 2024 on Monday, posting earnings per share (EPS) of 67 cents, more than a third greater than estimates. Revenue soared almost 40% to $496.7 million, also above forecasts. Net income rose to $106.5 million, compared with $44 million in the first quarter of fiscal 2023.

However, operating expenses jumped 24% in the quarter to $431.4 million, with Chief Executive Officer (CEO) Jay Chaudhry saying that to meet rising demand, “we are scaling our go-to-market and R&D organizations.”

Calculated billings were 34% higher at $456.6 million, exceeding expectations as well, but even with the gains, the company kept its outlook for full-year calculated billings in a range of $2.52 billion to $2.56 billion.

Zscaler did increase its 2024 EPS guidance to $2.45 to $2.48, up from the earlier prediction of $2.20 to $2.25, and lifted revenue to between $2.09 billion and $2.10 billion versus the previous $2.05 billion to $2.07 billion range.

By 1:15 p.m. Eastern Tuesday, shares of Zscaler were up almost 0.3%, but they have lost about a quarter of their value since the spring of 2022.
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