Zscaler tops estimates and lifts guidance, but free cash flow cut sends shares lower
Shares of Zscaler Inc. plunged more than 19% in late trading today after the cloud security company reported beats on earnings and revenue in its third quarter.
It also raised its full-year revenue and earnings outlook but slashed its free cash flow margin guidance on higher planned capital expenditure.
For the quarter ended April 30, Zscaler reported adjusted earnings per share of $1.08, up from 84 cents in the same quarter a year earlier, on revenue of $850.5 million, up 25% year-over-year. Analysts were expecting adjusted earnings of $1.01 per share on revenue of $835.55 million.
Annual recurring revenue rose 25% to $3.525 billion, with $166 million in net new annual recurring revenue added during the quarter. Stripping out the contribution from Zscaler’s August acquisition of managed detection and response firm Red Canary Inc., annual recurring revenue grew 21%, to $3.398 billion and net new annual recurring revenue grew 14%.
