Zscaler Inc (NASDAQ:ZS) stock rose 7.19% (As on March 6, 11:17:43 AM UTC-4, Source: Google Finance) after the company beats market’s expectations for the second quarter of FY25. Zscaler saw billings in the quarter of $743 million, up 18% year-over-year, with remaining performance obligations as of the end of the quarter rising 28%, to $4.6 billion. The company ended the quarter with 3,291 customers with $100,000 or more in annual recurring revenue, up 17% year-over-year, and 620 customers spending $1 million or more annually, up 25%. Zscaler’s customers are also sticking around, as the company ended the quarter with a 115% dollar-based net retention rate. Non-GAAP income from operations was $140.5 million, or 22% of revenue, compared to $103.2 million, or 20% of revenue, in the second quarter of fiscal 2024. Cash provided by operations was $179.4 million, or 27% of revenue, compared to $142.1 million, or 27% of revenue, in the second quarter of fiscal 2024. Free cash flow was $143.4 million, or 22% of revenue, compared to $100.8 million, or 19% of revenue, in the second quarter of fiscal 2024. Deferred revenue was $1,878.5 million as of January 31, 2025, an increase of 25% year-over-year. Cash, cash equivalents and short-term investments: $2,880.2 million as of January 31, 2025, an increase of $470.6 million from July 31, 2024.
Meanwhile, the company has started offering the Zero Trust Network Access (ZTNA) service natively integrated within RISE with SAP. Zscaler Private Access (ZPA) for SAP helps enable SAP customers with on-premises ERP workloads to simplify and de-risk their cloud migration, without the complexity and risk associated with traditional VPNs.
ZS in the second quarter of FY25 has reported the adjusted earnings per share of 78 cents, beating the analysts’ estimates for the adjusted earnings per share of 69 cents. The company had reported the adjusted revenue growth of 23 percent to $647.9 million in the second quarter of FY25, beating the analysts’ estimates for revenue of $634.4 million.
For its fiscal third quarter, Zscaler expects adjusted earnings per share of 75 to 76 cents on revenue of $665 million to $667 million. The revenue outlook was ahead of the $634.4 million expected by analysts.
For the full fiscal year, the company expects adjusted earnings per share of $3.04 to $3.09 on revenue of $2.64 billion to $2.654 billion. The revenue outlook was short of the $2.69 billion expected by analysts, but not enough to worry investors.