California-based Zscaler (NASDAQ: ZS) is a cloud-based security solutions provider. The company’s solutions are powered by a global network of more than 150 data centers.
With this in mind, we used TipRanks to take a look at the latest financial performance and risk factors for Zscaler.
Q1 Financial Results
Zscaler stock reported revenue of $230.5 million for its Fiscal 2022 first-quarter ended October 31, exceeding the consensus estimate of $208.4 million. Revenue was $142.6 million in the same quarter last year. Zscaler posted adjusted EPS of $0.14, beating the consensus estimate of $0.12. The company ended Q1 with $1.6 billion in cash.
For Q2, Zscaler anticipates revenue in the band of $240 million to $242 million and adjusted EPS of $0.11.
Risk Factors
According to the new TipRanks Risk Factors tool, Zscaler’s main risk category is Finance and Corporate, representing 43% of the total 61 risks identified for the stock. The company recently updated its profile with several new risk factors across different categories.
Zscaler ended Q1 with more than $927 million in debt tied to convertible senior notes. The company cautions investors that servicing its debts may consume a significant amount of cash. However, the business may not generate sufficient cash flow to meet the debt service payments, and the company may be unable to raise funds to repay the debts.
The company informs investors that if its solutions were to fail to offer the protection that customers expect, such as preventing a security breach, its reputation could be harmed and its business could be adversely impacted.
Zscaler tells investors that although its revenue and other performance metrics have been growing rapidly, such growth may not be indicative of future performance. It goes further to caution that its operating results may fluctuate significantly and fall below expectations.
The company also reminds investors that if its data centers were damaged, or failed to perform as required, its ability to provide services to customers could be adversely impacted. As a result, its business could suffer.
The Finance and Corporate risk factor’s sector average is 40%, compared to Zscaler’s 43%. Zscaler’s shares have gained about 54% since the beginning of 2021.
Analysts’ Take
Daiwa analyst Stephen Bersey recently downgraded Zscaler stock to a Sell from a Hold with a price target of $286. Bersey’s price target suggests 7.31% downside potential.
Consensus among analysts is a Moderate Buy based on 19 Buys, 7 Holds, and 1 Sell. The average Zscaler price target of $391.48 implies 26.88% upside potential to current levels.
Related News:
Cloudflare Joins Microsoft 365 Networking Partner Program; Shares Drop 6.5%
Tesla Stops Taking Model S, Model X Orders Outside North America -- Report
Novavax Files for EUA in the UAE; Shares Up 4%
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
