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Zscaler Inc ZS Stock Quote

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Smaller Beats, Smaller Raises; Macro Impacts Weigh on Zscaler’s Business; Lowering FVE to $170

Analyst Note

| Malik Ahmed Khan |

We are lowering our fair value estimate for narrow-moat Zscaler to $170 from $211 primarily because of a reduction in our top-line growth estimates as macroeconomic headwinds bear down on the firm. While last quarter remained strong despite the macro tightness, this quarter painted a different picture for Zscaler as the firm noted macroeconomic pressures affecting its billings as customers scrutinized their spend on technology. While we continue to view Zscaler's zero-trust security offerings as industry-leading, we expect elevated macroeconomic uncertainty to weigh down on the firm’s financials over the coming quarters. Zscaler’s shares fell 10% after hours. As a result, despite our fair value estimate revision, we think that the firm’s shares are trading at an attractive price for long-term investors willing to stomach the near-term volatility.

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Company Profile ZS

Business Description

Zscaler is a security-as-a-service firm that offers its customers cloud-delivered solutions for protecting user devices and data. The firm leverages its position in 150 colocation data centers to deliver traditionally appliance-based security functionality, such as firewalls and sandboxes, as a completely cloud-native platform. The firm focuses on large enterprise customers and offers two primary product suites: Zscaler Internet Access, which securely connects users to externally managed application and websites (such as Salesforce and Google), and Zscaler Private Access, which securely connects users to internally managed applications. Both product suites encompass a broad gamut of capabilities situated across the traditional security stack.

120 Holger Way
San Jose, CA, 95134
T +1 408 533-0288
Industry Software - Infrastructure
Most Recent Earnings Jul 31, 2022
Fiscal Year End Jul 30, 2023
Employees 4,975

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