Zscaler's guidance for the new fiscal year indicates that its growth will slow remarkably. The company is struggling amid a weak spending environment, but investors should look at the bigger picture.
Zscaler, Inc. (NASDAQ:ZS ) Goldman Sachs Communacopia + Technology Conference 2024 September 11, 2024 12:30 PM ET Company Participants Jay Chaudhry - Chairman and CEO Remo Canessa - CFO Conference Call Participants Gabriela Borges - Goldman Sachs Daniel Church - Goldman Sachs Gabriela Borges All right. We will kick it off.
Zacks.com users have recently been watching Zscaler (ZS) quite a bit. Thus, it is worth knowing the facts that could determine the stock's prospects.
Zscaler stock (NASDAQ: ZS) has declined from around $212 at the beginning of the year to $162 now - a 24% fall over a period when the benchmark S&P index grew 16%. While the stock recovered in August, it nosedived 20% in a single day after the cloud security company published its 2024 preliminary results.
Zscaler's latest earnings report exceeded Wall Street's expectations. But its outlook for fiscal 2025 was disappointing.
Revenue growth for fiscal Q4 remained robust. The prospect of slowing growth appears to have hurt Zscaler's stock.
Zscaler stock fell after the company forecasted decelerating revenue growth.
Zscaler's fiscal Q4 results were solid, and its strong net dollar retention was a highlight. Management's guidance disappointed investors.
Zscaler experienced an 18% selloff due to weaker-than-expected earnings guidance, indicating a YoY decline in non-GAAP EPS for FY2025. Despite exceeding revenue forecasts, ZS's revenue growth outlook signals a significant slowdown in billings and bookings in 1H FY2025, raising concerns about future growth trajectory. Deteriorating customer engagement, evidenced by a declining dollar-based net retention rate and slowing current remaining performance obligation growth, highlights intensified competition impacting ZS's growth outlook.
The cybersecurity specialist had a successful fourth quarter. Investors and analysts found its guidance wanting, though.
Zscaler's NASDAQ: ZS 2025 guidance disappointed the market and sparked a heavy round of analyst revisions. The bulk of revisions are negative and put the stock on MarketBeat's list of Most Downgraded names, not a typical position for stocks that are good buys.
The S&P 500 delivered a strong gain in the first half of 2024, but it's currently in the midst of a sell-off. The stock market faces some uncertainty in the short term, led by the upcoming Federal Reserve decision and the U.S. presidential election.