2min read Zscaler (ZS), a cloud security company, released its financial results for the first quarter of fiscal year 2024. The company reported strong growth across various financial metrics, including revenue, calculated billings, and deferred revenue. However, the billing expectations for FY24 fell short of expectations and revenue growth continued to decelerate, leading to a 5% decline in shares in after-hours trade.
In Q1, Zscaler achieved revenue of $496.7 million, representing 40% year-over-year growth, and outpacing expectations of $473 million. The growth rate is slightly lower compared to the previous quarters, with revenue growth percentages of 43%, 46%, and 51% in Q4, Q3, and Q2 of the prior year, respectively. Despite the slight slowdown, Zscaler's performance remains robust, indicating a steady demand for its cloud security solutions.
Calculated billings, a key indicator of future revenue growth, were $456.6 million, reflecting a 34% increase compared to the same period last year. This growth indicates the company's ability to secure new contracts and expand its customer base.
Zscaler's deferred revenue, which represents revenue received in advance for services yet to be provided, reached $1.40 billion, a 39% year-over-year increase, in line with expectations. This indicates strong customer demand and a solid backlog of contracted business.
The company's financial performance also saw improvements in net income. Zscaler reported a GAAP net loss of $33.5 million, a significant improvement from the GAAP net loss of $68.2 million in the same quarter of the previous year. Additionally, non-GAAP net income reached $106.5 million, compared to $44.0 million in the first quarter of fiscal 2023.
Zscaler expects Q2 revenue in the range of $505 million to $507 million, above consensus expectations of $497 million. The company also projects non-GAAP income from operations of $84 million to $86 million and non-GAAP net income per share of approximately $0.57 to $0.58.
For the full fiscal year 2024, Zscaler anticipates revenue between approximately $2.09 billion and $2.10 billion. Furthermore, calculated billings are expected to fall within the range of $2.52 billion to $2.56 billion, which places the mid-point below the consensus of $2.55 billion. Zscaler forecasts non-GAAP income from operations of $360 million to $365 million and non-GAAP net income per share of $2.45 to $2.48, assuming approximately 161 million fully diluted shares outstanding.
Following the release of Zscaler's financial results, stocks of CrowdStrike Holdings (CRWD) and Okta (OKTA) experienced declines in after-market trading. These cybersecurity plays report earnings later this week.
In summary, Zscaler delivered strong financial results in Q1 of fiscal 2024, with substantial year-over-year growth in revenue, calculated billings, and deferred revenue. The results were steady but the revenue growth continues to decelerate as the company deals with economies of scale. The billings outlook for the full year did come in slightly below expectations. The stock was up 71% YTD so it needed a pristine report but this blemish is leading to some profit taking by investors.
