Zscaler Inc
Q1 2023 Earnings
Did ZS Beat Earnings? Q1 2023 Results
Zscaler posted a clean beat across the board in its fiscal first quarter of 2023, with revenue climbing 54.2% year over year to $355.55 million against a consensus estimate of $343.89 million, while non-GAAP EPS of $0.29 topped the $0.26 estimate by 11.54%, underscoring the company's ability to grow rapidly while expanding profitability. The key driver was accelerating vendor consolidation, as enterprises under pressure from an elevated threat environment moved to standardize on zero trust architecture, boosting deferred revenue to $1.01 billion and lifting operating cash flow to $128.46 million, or 36% of revenue. Non-GAAP net income more than doubled to $44.00 million from $21.00 million a year ago, reflecting meaningful operating leverage even as the company continued to invest aggressively. The strong results were tempered, however, by a cautious outlook, as management flagged that deals are taking roughly four months longer to close than usual, sending shares lower after hours. For the full fiscal year, Zscaler guided for revenue of approximately $1.52 billion to $1.53 billion and non-GAAP EPS of $1.23 to $1.25.
- Vendor consolidation driving customers to commit to the broader Zscaler platform
- Elevated threat environment increasing demand for zero trust security architecture
- 54% year-over-year revenue growth
- Deferred revenue grew 55% year-over-year to $1,005.7 million, indicating strong future revenue visibility
- Customers standardizing on Zscaler platform to eliminate point products and simplify IT
“We delivered strong top line growth with improved operating profitability and increased free cash flow, once again performing at the Rule-of-80. We are seeing customers committing to our broader platform, driven by vendor consolidation and an elevated threat environment.”
Zscaler CEO, on the earnings call
Forward Guidance & Outlook
For Q2 fiscal 2023, Zscaler expects revenue of $364 million to $366 million, non-GAAP operating income of $42 million to $43 million, and non-GAAP EPS of approximately $0.29 to $0.30 on approximately 156 million diluted shares. For full-year fiscal 2023, the company expects revenue of approximately $1.525 billion to $1.530 billion, calculated billings of $1.930 billion to $1.940 billion (first-half billings mix ~43% of full-year), non-GAAP operating income of $179 million to $183 million, and non-GAAP EPS of $1.23 to $1.25 on approximately 157 million diluted shares.
ZS YoY Financials
Figures from SEC filings and company reports. Not investment advice.