Zscaler Releases Strong 10-Q Report

Zscaler, Inc. has recently released its 10-Q report, providing a detailed look at the company's financial performance and operations. Zscaler operates as a cloud security company, offering solutions for secure access to applications and internet destinations, digital experience measurement, posture control solutions, and platform modules. The company serves customers across various industries, including airlines and transportation, conglomerates, consumer goods and retail, financial services, healthcare, manufacturing, media and communications, public sector and education, technology, and telecommunications services.

In the report, Zscaler discussed its financial condition and results of operations, emphasizing its revenue primarily from sales of subscriptions to access its cloud platform, along with related support services. The company noted significant revenue growth in recent periods, with revenue reaching $1,574.9 million for the nine months ended April 30, 2024, compared to $1,161.9 million for the same period in 2023. However, Zscaler has incurred net losses in all annual periods since its inception, with a net loss of $42.8 million for the nine months ended April 30, 2024, compared to $171.7 million for the same period in 2023.

Zscaler also highlighted the impact of macroeconomic conditions, such as high inflation, high interest rates, and potential recessionary environments, on its business. The company noted that such conditions could cause uncertainty and impact the future demand for subscriptions of its cloud platform. Additionally, Zscaler discussed factors affecting its performance, including increased internet traffic and adoption of cloud-based software and security, new customer acquisition, and follow-on sales.

The report also delved into Zscaler's investments in business growth, particularly in research and development efforts, sales and marketing, and general and administrative expenses. The company emphasized its focus on managing its results of operations and investing judiciously while balancing investments in future growth.

Furthermore, Zscaler provided key business metrics and other financial measures, including the dollar-based net retention rate and non-GAAP financial measures such as non-GAAP gross profit, non-GAAP gross margin, non-GAAP income from operations, and non-GAAP operating margin. These measures are used to evaluate the company's ongoing operations and for internal planning and forecasting purposes.

The market has reacted to these announcements by moving the company's shares 1.2% to a price of $180.99. Check out the company's full 10-Q submission here.

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