Zscaler Reports Q4 Results
Sep 4, 2024
Zscaler reported a 30% increase in sales for Q4, with improving cash flow margins. Deferred revenue (future sales) grew 32%. The firm exceeded the high end of its guidance on all metrics. Business looks strong, with its security gateways surpassing half a trillion (!) daily transactions, and developments in AI/ML around data protection and URL categorization. The stock is down due to reduced guidance for 2025 sales - 21% growth at the high point is a drastic deceleration from 34% in 2024. Management explained this due to turnover in the sales organization and expected slow rollout of new products. I'm not too concerned (it might be a little "sand-bagged") but we will keep an eye on it. Improved cash profitability and lower dilution into the model actually leads to a rise in the fair value to $167. After the recent drop, the stock looks buyable but not cheap.
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