Zscaler rings the opening bell at the Nasdaq exchange in New York, March 16, 2018.
Source: Nasdaq
Zscaler shares jumped about 10% Friday after reporting stronger-than-expected results in the third fiscal quarter driven by artificial intelligence and widespread adoption of its zero-trust security platform.
“The proliferation of AI in all aspects of business is increasing the need for our AI security,” said CEO Jay Chaudhry in a release. “We empower customers to securely adopt both public GenAI apps and their own private AI apps, and we are increasing our investments in this area.”
The cloud security software company said revenues grew 23% to $678 million from about $553 million in the year-ago period. That topped the LSEG estimate of $666 million.
Zscaler reported adjusted earnings of 84 cents per share, topping the adjusted EPS of 75 cents per share expected by LSEG. Billings rose 25% to about $785 million, ahead of a $760 million estimate from StreetAccount.
Zscaler’s earnings come as a hopeful sign for a cybersecurity industry that has shown some pockets of weakness in a volatile macroeconomic environment. SentinelOne dropped after lowering its outlook, while Palo Alto Networks shares declined after missing on gross margin.
The report “echoes the strength we noted in our preview, and begins to prove out the reacceleration story that the company has been pointing to over the past few quarters,” wrote Morgan Stanley’s Keith Weiss.
Zscaler reported a net loss of $4.1 million, or a loss of 3 cents per share, for the quarter. Last year, net income came in at $19.1 million, or 12 cents per share.
The company issued upbeat adjusted EPS guidance for the fiscal fourth quarter. Zscaler expects adjusted earnings to range between 79 cents and 80 cents a share, versus the 77 cents expected by LSEG.
Along with its earnings, Zscaler appointed Kevin Rubin as its chief financial officer.
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