Zscaler shares soar as strong cybersecurity demand powers upbeat Q4 forecast, ET Telecom

Zscaler forecast fourth-quarter revenue and profit above estimates on Thursday, as businesses spend more on cybersecurity and networking solutions to combat complex online threats, sending its shares up 14% after the bell.

Cybersecurity has become more crucial in the recent years amid rising online threats and a rapid rise in artificial intelligence that enable hackers execute advanced cyberattacks.

The cloud-based security solution provider expects fourth-quarter revenue to be between $565 million and $567 million, with its midpoint above market expectation of $565.1 million, according to LSEG data.

Zscaler expects adjusted earnings per share of about 69 cents to 70 cents in the fourth quarter, compared with estimates of 68 cents.

“As threat actors evolve and continue to exploit firewall-based security, Zero Trust security remains a top IT priority, and an increasing number of enterprises are adopting our platform,” CEO Jay Chaudhry said.

Analysts expect budgets for cybersecurity products to rise in the second half, with some customers still waiting for the economy to improve.

The U.S. Department of State had said earlier in May it has been working with security vendors, including Zscaler, to secure its network after China-linked hackers stole tens of thousands of its emails by breaching Microsoft’s network last year.

Zscaler reported third-quarter revenue of $553.2 million, exceeding estimates of $535.9 million.

The company also raised its 2024 profit forecast and now expects adjusted net income between $2.99 and $3.01 per share, compared to previous forecast of $2.73 to $2.77.