Earnings To Watch: Zscaler (ZS) Reports Q2 Results Tomorrow

Cloud security platform Zscaler (NASDAQ:ZS) will be reporting results tomorrow after the bell. Here’s what to look for.

Zscaler beat analysts’ revenue expectations by 3.2% last quarter, reporting revenues of $553.2 million, up 32.1% year on year. It was a very strong quarter for the company, with an impressive beat of analysts’ billings and ARR (annual recurring revenue) estimates.

Is Zscaler a buy or sell going into earnings? Read our full analysis here, it’s free.

This quarter, analysts are expecting Zscaler’s revenue to grow 24.7% year on year to $567.6 million, slowing from the 43.1% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.69 per share.

The majority of analysts covering the company have reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Zscaler has a history of exceeding Wall Street’s expectations, beating revenue estimates every single time over the past two years by 4.2% on average.

Looking at Zscaler’s peers in the cybersecurity segment, some have already reported their Q2 results, giving us a hint as to what we can expect. Palo Alto Networks delivered year-on-year revenue growth of 12.1%, beating analysts’ expectations by 1.2%, and Varonis reported revenues up 12.9%, topping estimates by 4.4%. Palo Alto Networks traded up 7.2% following the results while Varonis was also up 14.7%.

Read our full analysis of Palo Alto Networks’s results here and Varonis’s results here.

There has been positive sentiment among investors in the cybersecurity segment, with share prices up 10.2% on average over the last month. Zscaler is up 21% during the same time and is heading into earnings with an average analyst price target of $231.1 (compared to the current share price of $200.01).

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