Zscaler Reports Wider Net Loss Amid Increased Spending
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 5 days ago
0mins
Should l Buy ZS?
Source: Newsfilter
- Wider Net Loss: Zscaler reported a net loss of $34.3 million for the second quarter ending January 31, significantly widening from a loss of $7.7 million a year earlier, reflecting increased spending on sales, marketing, and R&D in a competitive landscape.
- Rising Operating Expenses: The company's total operating expenses surged to $676.3 million in the second quarter, up 25.4% from $539.5 million a year ago, primarily driven by higher sales and R&D costs, which pose greater financial pressure amid economic uncertainty.
- Revenue Growth Exceeds Expectations: Despite the widening loss, Zscaler's revenue rose 26% year-over-year to $815.8 million, surpassing analysts' average estimate of $798.8 million, indicating strong market performance amid rising cybersecurity demand.
- Optimistic Future Outlook: Zscaler forecasts third-quarter adjusted earnings per share between $1.00 and $1.01, exceeding analysts' expectations of $0.95, and anticipates revenue between $834 million and $836 million, reflecting confidence in future growth.
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Analyst Views on ZS
Wall Street analysts forecast ZS stock price to rise
30 Analyst Rating
24 Buy
6 Hold
0 Sell
Strong Buy
Current: 148.580
Low
260.00
Averages
325.62
High
390.00
Current: 148.580
Low
260.00
Averages
325.62
High
390.00
About ZS
Zscaler, Inc. is a cloud security company. The Company has developed a platform incorporating core security functionalities needed to enable fast and secure access to cloud resources based on identity, context and an organization’s policies. Its Zscaler Zero Trust Exchange platform protects thousands of customers from cyberattacks and data loss by securely connecting users, devices, and applications in any location. Its solution is a purpose-built, multi-tenant, distributed cloud platform that incorporates the security functionality needed to enable users, applications, and devices to safely and efficiently utilize authorized applications and services based on an organization’s business policies. It delivers its solutions using a software-as-a-service (SaaS) business model and sells subscriptions to customers to access its cloud platform, together with related support services. It offers a security platform that combines its platform with automated security operations.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- AI-Driven Demand Surge: As enterprises increasingly focus on data sovereignty, Zscaler's solutions like DLP are becoming essential, further deepening its wallet share within existing accounts, highlighting the critical role of AI technology in driving data security demand.
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See More
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Investment Opportunities: Analysts suggest that despite current valuation concerns, Palo Alto and Zscaler are well-positioned for long-term growth, with forecasts indicating substantial upside potential for investors.
Market Sentiment: Recent trading volumes and price actions indicate a shift towards bullish sentiment, suggesting that the market may have reached a bottom, providing a favorable environment for investment.
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- Historical Context: NetBlocks attributes this blackout to a 'regime-imposed' nationwide shutdown, reminiscent of a similar incident in January that lasted weeks and obscured severe human rights violations, indicating the government's tendency to employ such tactics during public protests to maintain control.
- Cyber Attack Threats: U.S. and Israeli cyberattacks have targeted Iranian internet infrastructure, with multiple government-aligned news websites hacked, and even the popular religious calendar app BadeSaba, with over 5 million downloads, compromised, indicating a psychological warfare strategy against the populace.
- Potential Cyber Retaliation: As Iran retaliates with strikes against U.S. and allied targets, analysts warn that Iranian-aligned groups may initiate cyber attacks, with CrowdStrike's head noting observed activities consistent with Iranian threat actors, suggesting that more aggressive cyber operations may be forthcoming.
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