Zscaler shares lower as muted cloud security outlook mars Q4 earnings

Zscaler  (ZS) - Get Free Report shares slipped lower in pre-market trading after the group posted better-than-expected fourth quarter earnings that were partly offset by a muted outlook for its cloud cybersecurity products.

San Jose, California-based Zscaler said earnings for the three months ending in July rose 156% from last year to 64 cents per share, well ahead of Street forecasts, with revenues rising 43% to $455 million. 

Annual recurring revenue (ARR), a key performance metric for tech services companies, topped $2 billion over the prior quarter -- doubling from $1 billion in just seven quarters -- with 49 new $1 million ARR accounts added over the past three months.

Looking into its coming fiscal year, Zscaler said it sees earnings in the region of $2.20 to $2.25 per share on revenues of between $2.05 billion and $2.065 billion, a figure that would represent a 27.5% year-on-year growth rate. 

"In our outlook for fiscal '24, we're balancing our business optimism and confidence in our improved execution with ongoing macroeconomic uncertainties," CFO Remo Canessa told investors on a conference call late Tuesday. "We are entering Q1 with a record pipeline, and our customer engagements remain strong. However, we are mindful that in this environment predicting close rates and ramps in any 90-day period remains challenging."

"With a large market opportunity and customers increasingly adopting the broader platform, we'll invest aggressively to position us for long-term growth and profitability," he added. 

Zscaler shares were marked 1.4% lower in pre-market dealing to indicate a Wednesday opening bell price of $160.50 each, a move that would extend the stock's year-to-date gain to around 43.4%. . 

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