Zscaler (ZS) Reports Q3: Everything You Need To Know Ahead Of Earnings

Radek Strnad /
2022/05/25 8:00 am EDT

Cloud security platform Zscaler (NASDAQ:ZS) will be reporting results tomorrow after market close. Here's what investors should know.

Last quarter Zscaler reported revenues of $255.5 million, up 62.7% year on year, beating analyst revenue expectations by 5.66%. It was an impressive quarter for the company, with an exceptional revenue growth and a very optimistic guidance for the next quarter.

Is Zscaler buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Zscaler's revenue to grow 53.8% year on year to $271.4 million, in line with the 59.6% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.11 per share.

Zscaler Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 6.44%.

Looking at Zscaler's peers in the cybersecurity segment, some of them have already reported Q3 earnings results, giving us a hint what we can expect. Palo Alto Networks delivered top-line growth of 29.1% year on year, beating analyst estimates by 2.03% and Tenable reported revenues up 29.3% year on year, exceeding estimates by 3.82%. Palo Alto Networks traded up 11.7% on the results, and Tenable was down 0.9%. Read our full analysis of Palo Alto Networks's results here and Tenable's results here.

Tech stocks have been facing declining investor sentiment in 2022 and software stocks have not been spared, with share price down on average 20.2% over the last month. Zscaler is down 37% during the same time, and is heading into the earnings with analyst price target of $281.2, compared to share price of $127.73.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.