Zscaler (ZS) Tops Q2 EPS by 2c, Revenues Beat; Offers 3Q & FY21 Revenue Guidance Above Consensus

Zscaler (NASDAQ: ZS) reported Q2 EPS of $0.10, $0.02 better than the analyst estimate of $0.08. Revenue for the quarter came in at $157 million versus the consensus estimate of $147.35 million.

Second Quarter Fiscal 2021 Financial Highlights

• Revenue: $157.0 million, an increase of 55% year-over-year.
• Income (loss) from operations: GAAP loss from operations was $53.9 million, or 34% of total revenue, compared to $30.3 million, or 30% of total revenue, in the second quarter of fiscal 2020. Non-GAAP income from operations was $14.8 million, or 9% of total revenue, compared to $12.4 million, or 12% of total revenue, in the second quarter of fiscal 2020.
• Net income (loss): GAAP net loss was $67.5 million, compared to $29.2 million in the second quarter of fiscal 2020. Non-GAAP net income was $14.0 million, compared to $13.5 million in the second quarter of fiscal 2020.
• Net income (loss) per share: GAAP net loss per share was $0.50, compared to $0.23 in the second quarter of fiscal 2020. Non-GAAP net income per share was $0.10 for both the second quarter of fiscal 2021 and 2020.
• Cash flow: Cash provided by operations was $30.4 million, or 19% of revenue, compared to $5.4 million, or 5% of revenue, in the second quarter of fiscal 2020. Free cash flow was $18.0 million, or 11% of revenue, compared to negative $1.9 million, or negative 2% of revenue, in the second quarter of fiscal 2020. The free cash flow in the second quarter of fiscal 2020 was impacted by a $15.0 million cash payment as a result of a legal settlement agreement. Excluding this payment, free cash flow would have been $13.1 million, or 13% of revenue.
• Deferred revenue: $446.8 million as of January 31, 2021, an increase of 60% year-over-year.
• Cash, cash equivalents and short-term investments: $1,444.7 million as of January 31, 2021, an increase of $74.2 million from July 31, 2020.

"Businesses are accelerating their digital transformation, and this drove our strong second quarter results," said Jay Chaudhry, Chairman and CEO of Zscaler. "Our customers are turning to Zscaler’s Zero Trust Exchange to implement Zero Trust architecture to protect users, workloads and applications, and improve user experience. With strong momentum in our business, we will continue to aggressively invest to pursue our large market opportunity."

GUIDANCE:

Zscaler sees Q3 2021 EPS of $0.07, versus the consensus of $0.08. Zscaler sees Q3 2021 revenue of $162-164 million, versus the consensus of $153.73 million.

Zscaler sees FY2021 EPS of $0.39-$0.40, versus the consensus of $0.38. Zscaler sees FY2021 revenue of $634-638 million, versus the consensus of $612.39 million.

For the third quarter of fiscal 2021, we expect:

• Total revenue of $162 million to $164 million
• Non-GAAP income from operations of $11 million to $12 million
• Non-GAAP earnings per share of approximately $0.07, assuming approximately 146 million common shares outstanding

For the full year fiscal 2021, we expect:

• Total revenue of $634 million to $638 million
• Calculated billings of $820 million to $825 million
• Non-GAAP income from operations of $59 million to $61 million
• Non-GAAP net income per share of $0.39 to $0.40, assuming approximately 145 million to 146 million common shares outstanding

For earnings history and earnings-related data on Zscaler (ZS) click here.

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