Zscaler (ZS) Tops Q2 EPS by 6c, Revenues Beat; Offers Q3 & FY20 EPS/Revenue Guidance

Zscaler (NASDAQ: ZS) reported Q2 EPS of $0.09, $0.06 better than the analyst estimate of $0.03. Revenue for the quarter came in at $101.3 million versus the consensus estimate of $98.97 million.

Second Quarter Fiscal 2020 Financial Highlights

• Revenue: $101.3 million, an increase of 36% year-over-year.
• Income (loss) from operations: GAAP loss from operations was $30.3 million, or 30% of total revenue, compared to $5.2 million, or 7% of total revenue, in the second quarter of fiscal 2019. Non-GAAP income from operations was $10.9 million, or 11% of total revenue, compared to $10.0 million, or 13% of total revenue, in the second quarter of fiscal 2019.
• Net income (loss): GAAP net loss was $29.2 million, compared to $3.6 million in the second quarter of fiscal 2019. Non-GAAP net income was $12.0 million, compared to $11.6 million in the second quarter of fiscal 2019.
• Net income (loss) per share: GAAP net loss per share was $0.23, compared to $0.03 in the second quarter of fiscal 2019. Non-GAAP net income per share was $0.09, compared to $0.09 in the second quarter of fiscal 2019.
• Cash flow: Cash provided by operations was $5.4 million, or 5% of revenue, compared to $15.7 million, or 21% of revenue, in the second quarter of fiscal 2019. Free cash flow was negative $1.9 million, or negative 2% of revenue, compared to free cash flow of $12.0 million, or 16% of revenue, in the second quarter of fiscal 2019. Decrease in free cash flow was primarily due to a $15.0 million cash payment as a result of a legal settlement agreement. Excluding this settlement, free cash flow would have been $13.1 million, or 13% of revenue.
• Deferred revenue: $280.0 million as of January 31, 2020, an increase of 36% year-over-year.
• Cash, cash equivalents and short-term investments: $384.9 million as of January 31, 2020, an increase of $20.3 million from July 31, 2019.

"In the quarter, we delivered strong earnings results while making tremendous progress on our go-to-market initiatives," said Jay Chaudhry, Chairman and CEO of Zscaler. "Momentum is continuing to build across our business as our customers embrace and accelerate their cloud transformation."

GUIDANCE:

Zscaler sees Q3 2020 EPS of $0.01-$0.03, versus the consensus of $0.04. Zscaler sees Q3 2020 revenue of $105-107 million, versus the consensus of $104.6 million.

Zscaler sees FY2020 EPS of $0.14-$0.16, versus the consensus of $0.15. Zscaler sees FY2020 revenue of $414-417 million, versus the consensus of $410.38 million.

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

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