Financial Performance - The company reported net losses of $57.7 million, $202.3 million, and $390.3 million for fiscal years 2024, 2023, and 2022, respectively, with an accumulated deficit of $1,148.1 million as of July 31, 2024[98]. - The company expects significant increases in operating expenses as it continues to hire personnel and expand operations, which may hinder its ability to achieve profitability[98]. - The company has net operating loss carryforwards of approximately $1,497.6 million for U.S. federal income tax purposes and $630.8 million for state income tax purposes as of July 31, 2024[227]. - The company expects $554.9 million of state net operating losses to begin expiring at different periods starting in 2024, while $75.9 million will carry forward indefinitely[227]. - The company has foreign net operating loss carryforward of $75.6 million, all of which will be carried forward indefinitely[227]. - The company holds U.S. federal, California, and foreign research and development tax credit carryforwards of $133.4 million, $73.9 million, and $1.9 million, respectively[228]. - If not utilized, the federal research and development tax credit carryforwards will begin expiring at different periods starting in 2033[228]. Revenue Growth and Customer Dynamics - The company has experienced rapid growth in revenue and customer base, but this growth may not be sustainable, and future revenue growth rates are expected to decline[107]. - Customer retention is critical, as customers have no obligation to renew subscriptions, and failure to do so could lead to impairment losses related to deferred contract acquisition costs[105]. - The company’s ability to grow revenue will depend on maintaining successful relationships with channel partners and effectively training them to sell the cloud platform[117]. - Sales cycles for the company's cloud platform are long and unpredictable, particularly with large organizations, which can delay revenue recognition[153]. - The company recognizes revenue from subscriptions over one to three years, making it difficult to reflect immediate changes in sales or renewals in current financial results[156]. Competition and Market Position - The company faces intense competition and must successfully convince IT decision makers of the advantages of its cloud platform over legacy systems to attract new customers[101]. - The company faces intense competition in the network security solutions market, which is characterized by rapid technological changes and frequent new product introductions[119]. - The company’s competitive position may weaken if it fails to respond effectively to emerging technologies and evolving customer needs[132]. - The company’s cloud platform must interoperate with complex customer networks, and failure to do so could result in reduced demand and market share[145]. - The company relies heavily on its sales force to acquire new customers, and competition for skilled sales personnel is intense, impacting growth potential[149]. Operational Risks and Challenges - The company has experienced service disruptions and performance problems, which could negatively impact customer satisfaction and financial results[127]. - The company’s business is subject to various risks, including geopolitical instability, inflation, and global health crises, which could materially impact its operations[97]. - The company’s revenue growth is at risk due to potential interruptions in service delivery caused by external factors such as natural disasters or geopolitical events[130]. - The company’s internal systems are exposed to cybersecurity risks, which could adversely affect customer confidence and business operations[138]. - The company faces significant financial risks related to potential security breaches, which could lead to substantial expenditures and harm to its reputation and market position[141]. - The company is subject to risks related to cybersecurity, including potential security breaches that could harm its reputation and financial condition[180]. - The company relies on a limited number of suppliers for critical components, exposing it to risks of supply disruptions and increased costs[191]. - The technology industry has faced component shortages and delivery delays, which could impact the company's ability to expand its data center network[191]. International Operations and Currency Risks - Approximately 50% of the company's revenue in fiscal years 2024, 2023, and 2022 was derived from international customers[169]. - As of July 31, 2024, 63% of the company's full-time employees were located outside the United States[169]. - 37% of the global workforce is based in India, primarily in R&D, finance, and operations[175]. - The company faces challenges in managing international operations, including political and economic uncertainties, and increased costs for localization[170]. - The company is exposed to fluctuations in currency exchange rates, which could negatively affect its operating results[219]. - The company has a foreign currency risk management program to mitigate variability in gains and losses from foreign currency transactions[220]. - The majority of sales contracts are denominated in U.S. dollars, with a small portion in foreign currencies, impacting operating expenses incurred outside the U.S.[397]. Strategic Direction and Future Outlook - The company’s growth strategy focuses on long-term growth, which may not align with profitability expectations from analysts and shareholders[99]. - The company is increasingly utilizing AI and ML capabilities in its product offerings, which presents risks and challenges that could affect business development[185]. - The company may encounter difficulties in integrating acquired businesses, which could disrupt ongoing operations and divert management attention[173]. - The company’s future growth strategy may involve opening its cloud platform to third-party developers, but success is uncertain[187]. - The company expects existing cash and short-term investments to meet anticipated cash needs for at least the next 12 months[177]. - The company may need to raise additional funds for operating expenses and capital purchases, which could lead to significant dilution of stockholder ownership[177]. Governance and Ownership - As of July 31, 2024, executive officers, directors, and significant stockholders beneficially owned approximately 43.2% of the common stock, with CEO Jay Chaudhry and affiliates owning about 17.6%[231]. - The concentration of stock ownership may limit the ability of other stockholders to influence corporate matters, including director elections[232]. - The company has provisions in its charter that could delay or prevent a change of control, potentially affecting stockholder interests[232]. - Sales of substantial amounts of common stock by insiders could adversely affect market price and dilute ownership interests[238]. Compliance and Legal Risks - The company is subject to various labor laws that could result in government enforcement actions and penalties if not complied with[209]. - The company faces risks related to compliance with privacy, data protection, and cybersecurity regulations, which could impose added costs and penalties[212]. - Noncompliance with anti-corruption laws could lead to significant fines and harm the company's reputation and business[254]. - There is a risk that the company may face litigation related to intellectual property rights, which could increase costs and distract management[192]. - The company’s ability to protect its intellectual property rights is crucial for its competitive position, but current protections may be insufficient[199]. - The company faces potential claims of infringement from competitors, which could result in costly litigation and operational disruptions[195].

Zscaler, Inc. (NASDAQ:ZS) Goldman Sachs Communacopia + Technology Conference 2024 September 11, 2024 12:30 PM ET Company Participants Jay Chaudhry - Chairman and CEO Remo Canessa - CFO Conference Call Participants Gabriela Borges - Goldman Sachs Daniel Church - Goldman Sachs Gabriela Borges All right. We will kick it off. Good morning, and thanks for joining us at the Zscaler session at the Goldman Sachs conference today. I'm Gabriela Borges, I cover security here at Goldman. Delighted to have on stage with ...

Zscaler, Inc. (NASDAQ:ZS) Goldman Sachs Communacopia + Technology Conference 2024 September 11, 2024 12:30 PM ET Company Participants Jay Chaudhry - Chairman and CEO Remo Canessa - CFO Conference Call Participants Gabriela Borges - Goldman Sachs Daniel Church - Goldman Sachs Gabriela Borges All right. We will kick it off. Good morning, and thanks for joining us at the Zscaler session at the Goldman Sachs conference today. I'm Gabriela Borges, I cover security here at Goldman. Delighted to have on stage with ...

This hot cybersecurity company's hypergrowth days could be over. Zscaler's (ZS -3.37%) stock price sank 19% on Sept. 4 after its latest earnings report came out. For the fourth quarter of fiscal 2024, which ended on July 31, the cybersecurity company's revenue rose 30% year over year to $593 million and exceeded analysts' expectations by $25 million. Its adjusted earnings per share (EPS) grew 38% to $0.88 and cleared the consensus forecast by $0.19. Those headline numbers seemed healthy, but its guidance di ...

Investors should reevaluate Zscaler amid the latest earnings report and falling stock price. Zscaler's (ZS -3.37%) stock plunged following the release of its earnings report for the fourth quarter of fiscal 2024 (ended July 31). Although the company reported solid revenue growth and falling losses, a lower-thanexpected outlook for fiscal 2025 seemed to send investors running for the exits. Indeed, the stock's swoon brings with it a much lower share price. Now, the question for investors is whether that lowe ...

Core Insights - The article discusses the investment positions of Parkev Tatevosian, CFA, and The Motley Fool regarding Zscaler, indicating a recommendation for the stock [1] Company Analysis - Parkev Tatevosian has no position in any of the stocks mentioned, which includes Zscaler [1] - The Motley Fool holds positions in Zscaler and recommends it, suggesting a positive outlook on the company's performance [1] Disclosure and Compensation - Parkev Tatevosian is affiliated with The Motley Fool and may receive compensation for promoting its services, indicating a potential conflict of interest [1] - The Motley Fool has a disclosure policy that outlines its investment positions and recommendations [1]

Was the tech stock's sell-off an overreaction? Shares of Zscaler (ZS -3.37%) sank after the cybersecurity company issued disappointing guidance in conjunction with its fiscal 2024 fourth-quarter results this week. The stock now trades down nearly 27% so far this year. Disappointing guidance often triggers the market to sell a stock, but was this selloff an overreaction? If it was, is now a good opportunity to buy the stock on the dip? Disappointing guidance In its fiscal fourth quarter (ended July 31), Zsca ...

E n - l Michael Vi 60,0% 54.2% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 1Q23 What Happened in 4Q FY2024 Earnings Zscaler (NASDAQ:ZS) experienced an 18% selloff after issuing weaker-than-expected earnings guidance, which implies an 11% YoY decline in non-GAAP EPS for FY 2025. The company is currently facing growth headwinds amid increased competition in the cybersecurity industry. While 2.5's revenue forecast for FY2025 beat market consensus, the revenue growth outlook signals a significant slowdown in billings an ...

There's a stark difference between the company's recent performance and its anticipated future. Investors in cybersecurity company Zscaler (ZS 3.26%) probably weren't feeling too secure over the past few days. According to data compiled by S&P Global Market Intelligence, Zscaler's stock was down by almost 19% week to date as of late Thursday evening. An uninspiring quarterly earnings report, accompanied by analyst price target cuts and even a downgrade, was largely to blame. Trailing success, looming disapp ...

Zscaler's NASDAQ: ZS 2025 guidance disappointed the market and sparked a heavy round of analyst revisions. The bulk of revisions are negative and put the stock on MarketBeat's list of Most Downgraded names, not a typical position for stocks that are good buys. However, downgrades are relative to where the sentiment was pegged at the start of the cycle and where it ends at the end, which, in this case, is good on both counts. Zscaler Today | --- | --- | --- | |-----------------------|-------|-------| | | | | ...