Why Zscaler Inc (NASDAQ: ZS) stock is going gangbusters today

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Zscaler Inc (NASDAQ: ZS) stock rose over 21.9% on 29th May, 2020 (as of 10:20 am GMT-4 ; Source: Google finance) after the company posted better than expected results for the third quarter of FY 20 as work-from-home shifts due to the coronavirus pandemic boosted revenues and new orders for its cloud security platform. The company reported a fiscal third-quarter loss of $19.3 million compared to a net loss of $12.2 million a year ago. Calculated billings grow 55% year-over-year to $131.3 million during the period. The company has generated free cash flow of $9.1 million, or 8% of revenue, compared to $4.6 million, or 6% of revenue, in the third quarter of fiscal 2019.

Meanwhile, the company acquires Edgewise Networks, a pioneer in securing application-to-application communications for public clouds and data centers. Edgewise will broaden the Zscaler cloud-native platform and secures application-to-application communication to deliver stronger security in public clouds and data centers. In April 2020, the company had acquired Cloudneeti Corporation, which is a cloud security posture management (CSPM) company which prevents and remediates misconfigurations of applications in SaaS, IaaS and PaaS.

ZS in the third quarter of FY 20 has reported the adjusted earnings per share of 7 cents, beating the analysts’ estimates for the adjusted earnings per share of 2 cents, according to analysts surveyed by FactSet. The company had reported the adjusted revenue growth of 40 percent to $110.5 million in the third quarter of FY 20, beating the analysts’ estimates for revenue of $106.2 million.

For the fiscal fourth quarter, analysts project the adjusted earnings to be of 2 cents a share and sales to be of $114.4 million. Zscaler expects fourth-quarter adjusted earnings to be in the range of 2 cents to 3 cents a share and sales are expected to be in the range of $117 million and $119 million. For the fourth quarter of fiscal 2020, the company expects Non-GAAP income from operations to be in the range of $2 million to $4 million.

For the full year fiscal 2020, the company expects total revenue to be in the range of $422 million to $424 million, calculated billings to be in the range of $529 million to $531 million, Non-GAAP income from operations to be in the range of $24 million to $26 million and Non-GAAP earnings per share to be in the range of $0.20 to $0.21.

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