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.
Zscaler, Inc. (NASDAQ:ZS ) Citi Global TMT Conference September 5, 2024 11:40 AM ET Company Participants Jay Chaudhry – Chief Executive Officer and Founder Remo Canessa – Chief Financial Officer Conference Call Participants Fatima Boolani – Citi Fatima Boolani Everybody, Fatima Boolani here. I jointly run their software research team here at Citi.
Markets are driven by emotions and psychology. They are what makes patterns form on charts.
Despite ZS stock's 19% drop, the company's leadership in cloud security and strong growth potential make it worth retaining.
Zscaler delivered beats on the top and bottom lines Tuesday afternoon. Sales growth remained strong, but management forecast a growth slowdown in its fiscal 2025.
Shares of Zscaler Inc ZS tanked in early trading on Wednesday, even after the company reported upbeat fiscal fourth-quarter results.