Momentum driven by Zero Trust and AI innovation positions company for sustained growth
Zscaler, Inc. (ZS), a global leader in cloud security, reported impressive first-quarter fiscal 2025 results, highlighted by robust revenue growth, significant improvements in profitability, and positive cash flow. The company continues to capitalize on its advanced Zero Trust architecture and AI-driven solutions, driving broad customer engagement and expansion.
Financial Highlights
For Q1 FY 2025, Zscaler achieved:
- Revenue: $628.0 million, a 26% year-over-year increase.
- Calculated Billings: Grew 13% year-over-year to $516.7 million.
- Deferred Revenue: Reached $1.78 billion, up 27% year-over-year.
- GAAP Net Loss: Reduced to $12.1 million from $33.5 million in the prior-year quarter.
- Non-GAAP Net Income: Increased to $124.3 million, compared to $86.4 million a year earlier.
- Free Cash Flow: $291.9 million, representing 46% of revenue.
Jay Chaudhry, Chairman and CEO of Zscaler, expressed confidence in the company’s trajectory:
“Growing customer engagements and strong sales execution drove a solid Q1 with all metrics exceeding our guidance. The combination of Zero Trust and AI is creating exciting new opportunities, which we are well positioned to capture with our large and expanding platform.”
Operational Success
Zscaler’s operational highlights reflected its focus on efficiency and growth:
- Operating Income: GAAP loss from operations narrowed to $30.7 million, 5% of revenue, from $46.1 million in the prior year. Non-GAAP operating income grew to $134.1 million, 21% of revenue.
- Cash Position: The company closed the quarter with $2.71 billion in cash, cash equivalents, and short-term investments, up $298.2 million from the previous quarter.
Updated Non-GAAP Tax Measures
Starting in FY 2025, Zscaler has adopted a 23% projected non-GAAP tax rate for better consistency in reporting. This change aligns with the company’s significant growth in non-GAAP operating income and evolving global tax environment.
Forward Guidance
For the second quarter of FY 2025, Zscaler anticipates:
- Revenue: $633–$635 million.
- Non-GAAP Income from Operations: $126–$128 million.
- Non-GAAP EPS: Approximately $0.68–$0.69.
For the full fiscal year, the company projects:
- Revenue: $2.62–$2.64 billion.
- Calculated Billings: $3.12–$3.15 billion.
- Non-GAAP Income from Operations: $549–$559 million.
- Non-GAAP EPS: $2.94–$2.99.
Strategic Outlook
Zscaler’s leadership in Zero Trust cybersecurity and integration of AI technologies remain key drivers of its sustained growth. The company’s robust customer base, innovative solutions, and operational efficiency continue to position it as a market leader.
Chaudhry emphasized the company’s forward-looking approach:
“With our customer obsession, the world’s largest cybersecurity cloud, and an upleveled go-to-market machine, we are driving strong growth.”
Zscaler’s Q1 FY 2025 results underscore its ability to deliver solid financial performance while investing in transformative technologies. The company’s strategic focus on Zero Trust and AI positions it for long-term success in the evolving cybersecurity landscape.
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