What to Expect When Zscaler Reports After the Close

December 3, 2019 by Chris Lange

Zscaler Inc. (NASDAQ: ZS) is scheduled to release its fiscal first-quarter results after the markets close on Tuesday. The consensus estimates are calling for $0.01 in earnings per share (EPS) and $89.79 million in revenue. The same period of last year reportedly had $0.01 in EPS and $63.3 million in revenue.

Previously issued guidance projected EPS in the range of flat to $0.01 and total revenue of $89 million to $90 million.

In the fiscal fourth quarter, revenues grew 53% year over year to $86.1 million. At the same time, deferred revenue increased 53% to $251.2 million, while calculated billings grew 32% to $125.8 million.

In mid-November, the company was added to the Department of Homeland Security (DHS) Continuous Diagnostics and Mitigation (CDM) Program Approved Products List (APL). The CDM program helps agencies identify and mitigate cyber risk and quickly implement new cybersecurity solutions. All federal agencies can purchase CDM products from the APL through the Dynamic and Evolving Federal Enterprise Network Defense acquisition strategy.

Stephen Kovac, Zscaler Vice President of Global Government and Compliance, commented:

Civilian and Department of Defense agencies currently use Zscaler to provide secure access to data and applications. The addition to the CDM APL further expands the federal market for Zscaler, enabling federal agencies to more quickly modernize and shift applications and infrastructure to the cloud. By procuring Zscaler cloud-delivered service, agencies can reduce cyber risk and significantly improve the end user experience.

Excluding Tuesday’s move, Zscaler had outperformed the broad markets, with the stock up about 30% year to date. In the past 52 weeks, the stock was up closer to 36%.

A few analysts weighed in on Zscaler ahead of the report:

  • D.A. Davidson has a Buy rating.
  • Merrill Lynch rates it Buy with a $68 price target.
  • Goldman Sachs has a Neutral rating and a $45 price target.
  • Morgan Stanley rates it Underweight with a $40 price target.
  • Needham’s Buy rating comes with an $89 target price.
  • Citigroup has a Neutral rating with a $50 price target.

Shares of Zscaler traded down over 1% to $50.35 on Tuesday, in a 52-week range of $34.21 to $89.54. The consensus price target is $62.61.

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