Cloud security provider Zscaler (ZS:NASDAQ) raised annual guidance after reporting fiscal first quarter results that topped Wall Street estimates as demand was boosted by ongoing enterprise spending on cybersecurity.

Zscaler, one of analyst Wedbush’s favourite tech stocks, has seen its shares rally through 2023, up 65% year-to date. Investors had been anticipating a good start to the current financial year, bidding the stock more than 15% higher in the past month, explaining a round of profit taking post the first quarter numbers.

Zscaler shares are down about 6% in pre-market trading at $181.54.

WHAT ZSCALER REPORTED

The San Jose-based cyber security business, which provides tools to protect datacentres against hacking attacks, reported adjusted earnings per share of $0.67 on revenue of $496.7 million for the three months to 31 October. Consensus had been pitched at EPS of $0.49 and revenue of $473.4 million. 

Zscaler supplies data centres with cloud security tools

Calculated billings grew 34% year-on-year to $456.6 million, but that was slower than the 38% growth seen in the prior quarter, another factor that dragged on the stock.

GUIDANCE HIKED

Looking ahead to its fiscal second quarter, the company projected adjusted EPS of $0.57 to $0.58 on revenue of $505 million to $507 million, compared with estimates for $0.51 on revenue of $496.7 million respectively.

For its fiscal 2024 (to 31 Jul), adjusted EPS was seen in a range of $2.45 to $2.48 on revenue of roughly $2.09 billion to $2.10 billion. That compared with a prior forecast for adjusted EPS in a range of $2.20 to $2.25 on revenue of $2.05 billion to $2.07 billion.

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