Zscaler shares rose more than 8% in late trading after the cloud security company impressed investors with better-than-expected earnings and revenue figures in the second quarter of fiscal 2025.
For the quarter ended Jan. 31, Zscaler reported adjusted earnings per share of 78 cents, up from 63 cents in the same quarter of the previous fiscal year, on revenue of $647.9 million, up 23% year over year. Both figures exceeded analysts’ expectations, which assumed 69 cents per share and revenue of $634.4 million. This writes SiliconANGLE
Zscaler posted billings of $743 million in the quarter, up 18% year-on-year, while remaining performance commitments rose 28% to $4.6 billion at the end of the quarter.
The company closed the quarter with 3,291 customers generating $100,000 or more in recurring revenue annually, up 17% year over year. In addition, it had 620 customers spending $1 million or more annually, a 25% increase. Customer retention also remains strong, as Zscaler had a net dollar retention rate of 115% at the end of the quarter.
Highlights of the quarter included the November launch of Zero Trust Segmentation. This solution provides more secure, flexible and cost-effective connections between users, devices and workloads across multiple locations.
Secure virtual islands
This solution eliminates the need for traditional firewalls, software-defined wide-area networks and site-to-site VPNs by transforming branch offices, factories and cloud environments into isolated, secure virtual islands. These environments connect directly to the Zscaler cloud platform, which enforces corporate policies to prevent the spread of ransomware, secure IoT and operational technologies and reduce network complexity.
The solution improves customer security by preventing lateral movement of ransomware attacks, while cutting firewall and infrastructure costs by half.
In addition, Zscaler began native integration of its Zero Trust Network Access service within RISE with SAP. Zscaler Private Access for SAP helps SAP customers with on-premises ERP workloads simplify and make their cloud migration more secure without the complexity and risks of traditional VPNs.
Zero Trust and AI driving demand
The growing adoption of Zero Trust and AI is driving strong demand for the platform, resulting in another strong quarter in which both revenue and profit expectations were exceeded, CEO Jay Chaudhry said in the company’s earnings report. He emphasized that Zscaler is leading the industry to Zero Trust Everywhere by transforming security from device-based solutions to a Zero Trust architecture.
For the third fiscal quarter, Zscaler expects adjusted earnings per share of 75 to 76 cents on revenue of $665 million to $667 million, higher than the $634.4 million analysts had forecast.
For the full fiscal year, the company expects adjusted earnings per share of $3.04 to $3.09 on revenue of $2.64 billion to $2.654 billion. While this was slightly lower than the $2.69 billion expected by analysts, it was not enough to worry investors.