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Category: Stock Market and Zscaler
Date: 11 September 2019 Stock Price: $48.77 We take a look at the 4th quarter earnings release of their 2019 fiscal year of Zscaler a cloud services provider. Earnings beat estimates to the upside but the market is punishing the stock hard after the release of their earnings report.
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About Zscaler
Zscaler enables the world’s leading organizations to securely transform their networks and applications for a mobile and cloud-first world. Its flagship services, Zscaler Internet Access™ and Zscaler Private Access™, create fast, secure connections between users and applications, regardless of device, location, or network. Zscaler services are 100 percent cloud-delivered and offer the simplicity, enhanced security and improved user experience that traditional appliances are unable to match. Used in more than 185 countries, Zscaler operates a multi-tenant distributed cloud security platform, protecting thousands of customers from cyberattacks and data loss
Financial overview of Zscaler's latest earnings report
The numbers we are interested in (for the quarter):
- Net sales $86.108 million (up from $56.174 million from the same quarter of the previous year)
- Cost of sales: $17.399 million (up from $11.501 million for the same quarter of the previous year)
- Net loss: -$5.276 million (up from -$6.926 million for the same quarter of the previous year)
- Diluted earnings per share: -$0.04 (up from -$0.06 for the same quarter of the previous year) -GAAP
- Diluted weighted-average shares outstanding: 126.203 million (up from 119.204 million for the same quarter of the previous year)
- Cash and cash equivalents: $74.484 million
- Cash and cash equivalents per share: $0.59
- Cash and cash equivalents makes up 1.2% of Zscaler's market capital
- Cash and cash equivalents makes up 12.99% of Zscaler's total assets
- Accounts receivable: $93.341 million (up from $61.661 million for the same quarter of the previous year)
- Accounts receivable makes up 15.44% of the group's total assets.
- Accounts receivable grew by 51.37%
- Stockholders equity: $308.558 million
- Stockholders equity per share: $2.44
Zscaler's management commentary on the results and earnings guidance
SAN JOSE, Calif., Sept. 10, 2019 (GLOBE NEWSWIRE) -- Zscaler, Inc. (Nasdaq: ZS), the leader in cloud security, today announced financial results for its fiscal fourth quarter and fiscal year ended July 31, 2019.
"Our strong fiscal 2019 results demonstrate our ability to drive growth and profitability while investing in our business, as we continue to see enterprises transforming their network and security to realize the benefits of the cloud," said Jay Chaudhry, Chairman and CEO of Zscaler. "I am also excited to welcome Dali Rajic as our new President Go-to-Market and Chief Revenue Officer and look forward to working together to scale our business to capture our significant market opportunity."
Financial Outlook
For the first quarter of fiscal 2020, we expect:
For the full year fiscal 2020, we expect:
"Our strong fiscal 2019 results demonstrate our ability to drive growth and profitability while investing in our business, as we continue to see enterprises transforming their network and security to realize the benefits of the cloud," said Jay Chaudhry, Chairman and CEO of Zscaler. "I am also excited to welcome Dali Rajic as our new President Go-to-Market and Chief Revenue Officer and look forward to working together to scale our business to capture our significant market opportunity."
Financial Outlook
For the first quarter of fiscal 2020, we expect:
- Total revenue of $89 million to $90 million
- Non-GAAP loss from operations of $1 million to breakeven
- Non-GAAP earnings per share of $0.00 to $0.01, assuming approximately 139 million common shares outstanding
For the full year fiscal 2020, we expect:
- Total revenue of $395 million to $405 million
- Calculated billings of $490 million to $500 million
- Non-GAAP income from operations of $13 million to $18 million
- Non-GAAP earnings per share of $0.12 to $0.15, assuming approximately 140 million common shares outstanding
Zscaler (NASDAQ: ZS) stock price history
The image below shows the stock price history of Zscaler since their lising in March 2018. Its been a pretty good time for stockholders (up until today). Since listing to the current price of $48.77 the stock price has increased by 54.8%. Not bad at all. But for the trading day 11 September 2019, Zscaler's stock price is currently down by $12.83 or -20.81% after the release of their latest earnings report.
Recent coverage of Zscaler
The extract below touches on the latest results from Zscaler, as obtained from Zacks.
Zscaler (ZS - Free Report) came out with quarterly earnings of $0.07 per share, beating the Zacks Consensus Estimate of $0.01 per share. This compares to loss of $0.01 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 600%. A quarter ago, it was expected that this cloud-based information security provider would post earnings of $0.01 per share when it actually produced earnings of $0.05, delivering a surprise of 400%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times. Zscaler, which belongs to the Zacks Internet - Services industry, posted revenues of $86.11 million for the quarter ended July 2019, surpassing the Zacks Consensus Estimate by 4.82%. This compares to year-ago revenues of $56.17 million. The company has topped consensus revenue estimates four times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Zscaler shares have added about 58.2% since the beginning of the year versus the S&P 500's gain of 18.8%.
Read the full article here.
Zscaler (ZS - Free Report) came out with quarterly earnings of $0.07 per share, beating the Zacks Consensus Estimate of $0.01 per share. This compares to loss of $0.01 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 600%. A quarter ago, it was expected that this cloud-based information security provider would post earnings of $0.01 per share when it actually produced earnings of $0.05, delivering a surprise of 400%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times. Zscaler, which belongs to the Zacks Internet - Services industry, posted revenues of $86.11 million for the quarter ended July 2019, surpassing the Zacks Consensus Estimate by 4.82%. This compares to year-ago revenues of $56.17 million. The company has topped consensus revenue estimates four times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Zscaler shares have added about 58.2% since the beginning of the year versus the S&P 500's gain of 18.8%.
Read the full article here.
Zscaler (NASDAQ: ZS) latest stock valuation
So is the market warranted in punishing Zscaler stock as hard as it is after the release of their latest earnings report and their 2020 fiscal guidance provided? The short answer is yes. The group is loss making, it has negative cash flows and its stock in issue is increasing. Revenues however saw strong growth but its time that top line growth starts showing in the bottom line. According to the group's fiscal guidance they will make a small profit in their 2020 fiscal year but not enough to warrant its current lofty valuation. They predict earnings per share for full fiscal 2020, which at its current price would place it on a PE ratio of 406. That is a true pie in the sky valuation.
We cannot at this time provide a accurate estimate on the value Zscaler. But what we can say is that we do not recommend investing in the stock until such time that top line growth starts showing in the bottom line and valuations comes down to more realistic levels based on actual profits made.
We cannot at this time provide a accurate estimate on the value Zscaler. But what we can say is that we do not recommend investing in the stock until such time that top line growth starts showing in the bottom line and valuations comes down to more realistic levels based on actual profits made.