Zscaler Inc. (ZS) - Get Report shares traded at a record high Friday after posting its fifth consecutive quarter of Street-beating profits as work-from-home shifts amid the coronavirus pandemic boosted revenues and new orders for its cloud security platform.
Zscaler said non-GAAP earnings for the three months ending in April, its fiscal third quarter, were pegged at 7 cents per share, up from 5 cents a share over the same period last year and firmly ahead of the Street consensus of 2 cents per share. Billings hit $113 million, the company said, and overall revenues surged 40% to $110.5 million.
Looking into the final months of its financial year, Zscaler said it sees revenues in the region of $422 million to $424 million and billings of around $530 million.
"Our strong results are a reflection of our sales execution and the entire Zscaler team stepping up to help our customers succeed in these difficult times. The mitigation activities taken by every enterprise in response to the COVID-19 pandemic created an immediate need for strong security and access to the internet and business applications, all while working from anywhere," said CEO Jay Chaudhry
"The digital transformation that is driving our business is further accelerating, and we believe the Zscaler cloud security platform is best positioned to help our customers thrive no matter where their teams are working," he added.
Zscaler shares were marked 23.6% higher in early trading Friday to change hands at $93.80 each, an all-time high that values the San Jose, California-based tech group at just over $12 billion.
Gains for the stock were also boosted by a new cloud security contract with the Defense Innovation Unit, a division of the U.S. Department of Defense, that could ultimately scale to as many as half a million users.
"Importantly, the dramatic shift to working from home was an ideal use case to demonstrate how the world can work uninterrupted, away from the traditional corporate network," said Credit Suisse analyst Brad Zelnick, who boosted his price target on the stock by $15 to $90 per share following last night's results.
"This served to accelerate transformation initiatives that were already underway as evidenced by strength in both ZIA and ZPA (43% of new and add-on business, up from~20% in F1H20)," he added. "It is also clear CRO Dali Rajic’s overhaul of the company’s sales organization is having a positive impact, with the coincidental hiring of a record number of salespeople."