Zscaler Surpasses Estimates Yet Faces 2025 Guidance Concerns

Zscaler reported strong fourth-quarter results, exceeding analyst expectations for both revenue and earnings. The company achieved a significant milestone by surpassing $2.5 billion in annual revenue, fueled by a 30% growth in revenue and 27% growth in billings. However, the forecast for fiscal year 2025, projecting a year-over-year growth rate of 19% to 20%, has garnered mixed reactions from investors, primarily due to lower billings growth in the first half of the fiscal year, stemming from previous contract terms. Despite these concerns, Zscaler co-founder Jay Chaudhry emphasized a positive outlook during a discussion about the results, indicating that billings growth is expected to pick up in the second half of 2025. The company's position in the cybersecurity market remains strong, particularly with its pioneering of zero trust architecture. Zscaler's services are relied upon by 35% of Global 2000 companies and 40% of Fortune 500 firms. With the intention to scale operations significantly, Chaudhry noted that the sales organization is being restructured to achieve greater impact as the company aims to reach over $5 billion in annual recurring revenue. Furthermore, he remarked on the competitive landscape, positioning Zscaler favorably against traditional technologies and new entrants attempting to establish themselves within the large enterprise market, affirming Zscaler's unique value and resilience, which sets it apart from competitors who lack modernized solutions.