Zscaler Reports 26% Revenue Growth to $627.96 Million, Net Loss Improves

Zscaler, Inc. reported significant financial performance for the three months ending October 31, 2024, with revenue reaching $627.96 million, a 26% increase from $496.70 million in the same period last year. The company’s gross profit also rose to $486.49 million, resulting in a gross margin of 77%. Despite this growth, Zscaler recorded a net loss of $12.05 million, an improvement from the $33.48 million loss reported in the prior year. The loss per share was $0.08, compared to $0.23 in the previous year.

The increase in revenue was primarily driven by a 12% growth in customer count, bringing the total to over 8,650 customers. This growth was complemented by an increase in sales to existing customers, which contributed approximately $94.7 million to the revenue increase. The company also noted a rise in operating expenses, which totaled $517.16 million, up from $431.37 million a year earlier. This increase was largely attributed to higher sales and marketing expenses, which grew by 15% to $306.09 million, and research and development costs, which surged by 36% to $154.25 million.

In terms of strategic developments, Zscaler completed the acquisition of Securelyshare Software Private Ltd. in August 2023 for $5.3 million, integrating its technology into Zscaler's cloud platform. The company continues to invest heavily in its research and development efforts to enhance its offerings, particularly in artificial intelligence and machine learning capabilities. As of October 31, 2024, Zscaler's cash and cash equivalents stood at $1.55 billion, reflecting a solid liquidity position to support ongoing investments.

Operationally, Zscaler's customer base is geographically diverse, with 51% of revenue coming from the United States, 30% from Europe, the Middle East, and Africa, and 16% from the Asia Pacific region. The company reported a dollar-based net retention rate of 114%, indicating strong customer loyalty and expansion within existing accounts. Zscaler's deferred revenue as of October 31, 2024, was $1.78 billion, a slight decrease from $1.90 billion at the end of the previous fiscal year, reflecting the company's ongoing subscription model.

Looking ahead, Zscaler anticipates continued investment in its sales and marketing efforts to capture additional market share and drive further adoption of its cloud platform. The company expects to incur net losses in the near term as it prioritizes growth and expansion, particularly in light of macroeconomic uncertainties that may affect customer purchasing decisions. Zscaler remains committed to enhancing its cloud security solutions and expanding its global footprint, positioning itself for long-term growth in the evolving cybersecurity landscape.