What led to Zscaler Inc (NASDAQ: ZS) stock crash

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Zscaler Inc (NASDAQ: ZS) stock lost over 9.1% on 4th December, 2019 (As of 9:35 am GMT-5; Source: Google finance) after the company posted better than expected results for the first quarter of FY 20 but gave mixed second-quarter and full-year earnings guidance. Billings grew 37% year-over-year to $88.3 million. Remaining Performance Obligations or RPO was of $555 million on October 31st, up 35% from $411 million one year ago. Net income in the first quarter was $4.1 million and ended the quarter with $378 million in cash, cash equivalents and short-term investments. The company has generated the positive free cash flow of $9.4 million in the quarter compared to positive $5.2 million for the same quarter a year ago.

Meanwhile, ZS in Q1 had won two deals with civilian agencies each that has an annual contract value greater than $1.5 million. The first win was with a large strategic agency with an initial order for ZIA and ZPA for 15,000 mobile users to deliver secure access to applications with zero trust network access. The second agency purchased the complete ZIA and ZPA platform for all 6,800 employees for the enablement of cloud transformation to secure SD-WAN deployment for local breakouts and to provide direct access to any application from anywhere.

ZS in the first quarter of FY 20 has reported the adjusted earnings per share of 3 cents, while reported the adjusted revenue growth of 48 percent to $93.6 million in the first quarter of FY 20. From a geographic perspective, for the quarter Americas formed 51% of revenue EMEA was 41% and APJ was 8%.

Zscaler expects the earnings to be of 3 cents per share on revenue expected to be in the range of $97 million and $100 million for the second quarter, while Wall Street had expected earnings of 4 cents per share and revenue of $97.4 million, according to Refinitiv. For fiscal year 2020, the company expects earnings to be in the range of 13 cents and 15 cents per share and revenue is expected to be in the range of $405 million and $413 million, compared to the 15 cent EPS and $403 million in revenue analysts had projected. For the full year fiscal 2020, the company expects the calculated billings to be in the range of $500 million to $510 million.

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