Zscaler Inc (ZS) Reports Robust Revenue Growth and Improved Profitability in Q2 Fiscal 2024
Revenue: Increased by 35% year-over-year to $525.0 million.
Calculated Billings: Grew 27% year-over-year to $627.6 million.
Deferred Revenue: Expanded by 35% year-over-year to $1,502.2 million.
GAAP Net Loss: Improved to $28.5 million from a GAAP net loss of $57.5 million year-over-year.
Non-GAAP Net Income: More than doubled to $121.1 million from $57.6 million year-over-year.
Free Cash Flow: Increased to $100.8 million, representing 19% of revenue.
On February 29, 2024, Zscaler Inc (NASDAQ:ZS) released its 8-K filing, detailing the financial results for the second quarter of fiscal year 2024, which ended on January 31, 2024. The company, a leading provider of cloud-native cybersecurity solutions, reported a significant year-over-year increase in revenue, calculated billings, and deferred revenue, alongside a substantial improvement in both GAAP net loss and non-GAAP net income.
Zscaler is a SaaS firm that specializes in delivering comprehensive cybersecurity solutions through its Zscaler Internet Access and Zscaler Private Access services. Headquartered in San Jose, California, the company has been publicly traded since 2018 and continues to demonstrate strong financial performance and market leadership.
Financial Performance and Operational Highlights
Zscaler's revenue for the quarter was $525.0 million, a 35% increase from the same period last year. This growth is a testament to the company's robust business model and the increasing demand for cloud security solutions. The company's calculated billings also saw a healthy increase of 27% year-over-year, amounting to $627.6 million, indicating strong sales execution and customer commitment.
The firm's deferred revenue grew in tandem with its billings, reaching $1,502.2 million, which is a clear indicator of future revenue potential. Zscaler's GAAP net loss showed significant improvement, decreasing to $28.5 million from a GAAP net loss of $57.5 million in the prior year. More impressively, non-GAAP net income more than doubled to $121.1 million, compared to $57.6 million in the second quarter of fiscal 2023, reflecting the company's ability to scale profitably.
Free cash flow, an important metric for assessing the health of a company's operations, was $100.8 million, or 19% of revenue. This is an increase from 16% of revenue in the same quarter of the previous fiscal year, demonstrating Zscaler's efficiency in capital management and its capacity to generate cash.
Strategic Developments and Future Outlook
Zscaler introduced the Zscaler Zero Trust SASE, a pioneering single-vendor SASE solution built on Zero Trust, and announced the availability of Business Insights, enhancing its Business Analytics portfolio. The company was also named the only leader in the Forrester Wave for SaaS Security Posture Management for Q4 2023.
Looking ahead, for the third quarter of fiscal 2024, Zscaler expects revenue between $534 million to $536 million and non-GAAP net income per share of approximately $0.64 to $0.65. For the full fiscal year 2024, the company anticipates revenue to be in the range of approximately $2.118 billion to $2.122 billion, with calculated billings between $2.55 billion to $2.57 billion.
The company's financial outlook is based on current expectations and may be subject to change due to various risk factors, including macroeconomic conditions, market competition, and operational execution challenges.
Conclusion
Zscaler Inc (NASDAQ:ZS) has demonstrated a strong financial performance in the second quarter of fiscal 2024, with significant improvements in key metrics such as revenue, calculated billings, and net income. The company's strategic initiatives and product innovations position it well for continued growth in the cybersecurity market. Investors and stakeholders can look forward to Zscaler's sustained momentum and operational excellence in the upcoming quarters.
For a more detailed analysis of Zscaler's financial results and future outlook, investors are encouraged to review the full earnings report and listen to the earnings call. The company's commitment to customer success and innovation in cloud security remains a driving force behind its impressive financial achievements.
Explore the complete 8-K earnings release (here) from Zscaler Inc for further details.
This article first appeared on GuruFocus.
