Blogs -Zscaler Q1 2022 Earnings - Quick Update and Analysis

Zscaler Q1 2022 Earnings - Quick Update and Analysis


December 01, 2021

author

I/O Fund

Team

I/O Fund is keeping tabs on cloud security company Zscaler because of its surging sales and strong growth over multiple quarters. Zscaler's success is evident in the most recent earnings results.

Sales History

Zscaler's growth is impressive, because sales have grown over 50%+ for five consecutive quarters.

https://images.prismic.io/bethtechnology/941e24cb-94dd-4dca-a51d-c46e82063488_zs+growth.png?auto=compress,format

In fact, as you can see in the chart below, Zscaler has grown 40%+ or more in every quarter, except one, as a public company.

https://images.prismic.io/bethtechnology/840713a1-8721-4eb4-b35b-caadb876db50_zs+sales+history.png?auto=compress,format

Growth Factors

Zscaler's notably high growth is due to a few secular tailwinds propelling the company forward:

  1. Rise of the cloud environment
  2. Obsolescence of firewalls used to secure networks in the cloud
  3. Network effects, as Zscaler collects massive amounts of data, over 300 trillion signals everyday

Upward Trending Sales and Persistent Demand

Market demand for Zscaler's products and solutions is demonstrated in customers' willingness to pay for multi-year contracts upfront, allowing for a constant stream of revenue and capital to go back into Zscaler's operations.

Current cashflow trends are indicative of Zscaler's ability to deliver high quality results.

We can see upfront cash payments by looking at deferred revenue, which increased 74% YoY. It is also worth pointing out that long-term deferred revenue (DR) increased 99% YoY to $63 million. Deferred revenue turns into sales in the future and an outsized growth in DR highlights that there is ample balance sheet support for future sales.

Deferred revenue actually represented 281% of Q1 sales, the highest seasonal value in the firm's history.

Thoughts from Zscaler's Management

Management has raised its sales guide, and expects FY2022 sales to grow 50% YoY to $1 billion. Management also expects billings to increase 40% YoY to $1.3 billion, which further underscores recent topline growth.

I/O Fund's Potential Position on Zscaler

I/O Fund is watching Zscaler closely but we do have reservations about the company’s elevated valuation. Zscaler trades at over 50x fwd sales which is a premium multiple in the cloud category.

We will be tracking cloud earnings to better understand whether Zscaler is positioned to continue to grow strongly going forward.

But there's more to Zscaler and this analysis -

Sign up for I/O Fund's free newsletter with gains of up to 1100% here.

Look over our Premium Services, offered through our Premium Membership program, here.

Gains of up to 403% from our Free Newsletter.

Here are sample stock gains from the I/O Fund’s newsletter --- produced weekly and all for free!

+344% on Nvidia

+403% on Bitcoin

+218% on Roku

*as of March 15, 2022

Our newsletter provides an edge in the world’s most valuable industry – technology. Due to the enormous gains from this particular industry, we think it’s essential that every stock investor have a credible source who specializes in tech. Subscribe for Free Weekly Analysis on the Best Tech Stocks.

If you are a more serious investor, we have a premium service that offers lower entries and real-time trade alerts. Sample returns on the premium site include 324% on Zoom, 601% on Nvidia, 445% on Bitcoin, and 4-digits on an alt-coin. The I/O Fund is audited annually to prove it’s one of the best performing Funds on the market with returns that beat Wall Street funds. 

beth

More To Explore

Newsletter

The Importance of Verified Returns and Risk Management for Retail Investors

The Importance of Verified Returns and Risk Management for Retail Investors

Last year was a stellar year for investors – in 2023, the Nasdaq 100 rose 54% for its best annual return since 1999, while the S&P 500 gained 24%. The Magnificent 7 were the de facto leaders of this m

March 27, 2024
ARM Building

Arm Stock: AI Chip Favorite Is Overpriced

Arm Holdings is positioned to capitalize on the growing adoption of artificial intelligence (AI) technologies, leveraging its established licensing model and extensive ecosystem to drive future growth

March 26, 2024
Meta Building Picture

Top 3 Ad-Tech Stocks For 2024

Ad spending growth is widely forecast to accelerate in 2024, after a challenging macro environment significantly dented budgets and growth in 2023. The US advertising market is already showing positiv

March 18, 2024
Cybersecurity Apps

Cybersecurity Stocks: CrowdStrike Soars While Palo Alto And Zscaler Fall

This year has led to a split landscape for cybersecurity stocks, with two of cybersecurity leaders up more than 20% YTD while others are negative YTD. In the past, we’ve discussed the resiliency of th

March 10, 2024
The Magnificent 7 Are Falling Like Dominos; Only 3 Remain

The Magnificent 7 Are Falling Like Dominos; Only 3 Remain

The Magnificent 7 of 2023 have now become 2024’s Magnificent 3: Nvidia, Meta and Amazon. Of these, Nvidia’s saw a stellar start to the year as shares have gained nearly 60% YTD due to the GPU leader’s

March 05, 2024
Nvidia Stock Gained $1.5 Trillion To Surpass The FAANGs - Apple Is Next

Nvidia Stock Gained $1.5 Trillion To Surpass The FAANGs - Apple Is Next

Today, Nvidia surpassed a $2 trillion market cap compared to Apple’s $2.8 trillion. The company has surpassed Amazon, Google, Tesla, Meta and Netflix. The only one left standing is Apple and we have 2

February 28, 2024
https://images.prismic.io/bethtechnology/93644c8f-e9e6-4b61-944f-d7ebc957628a_Palantir+Stock+Surges+From+Artificial+Intelligence+Platform.jpg?auto=compress,format

Palantir Stock Surges From Artificial Intelligence Platform

Palantir’s Q4 earnings confirmed an acceleration in its US commercial business as it closed out its first GAAP profitable year. Shares are reflecting the optimism surrounding Palantir’s commercial seg

February 20, 2024
AI Chip

AI Driving Acceleration For Big 3 Cloud Stocks

Big Tech’s participation in the market’s push to all-time highs is becoming increasingly narrow, with Nvidia, Meta, Microsoft and Amazon serving as the primary contributors to 2024’s rally.

February 13, 2024
Apple Can't Save This Tech Rally

Apple Can’t Save This Tech Rally

In this article, I lay out both the bull and bear cases for 2024 and beyond. Interestingly, both are calling for a level of volatility in 2024 that will, at least, retrace the rally we’ve seen since N

January 31, 2024
Coinbase, Robinhood: Examining The Impact Of Spot Bitcoin ETFs

Coinbase, Robinhood: Examining The Impact Of Spot Bitcoin ETFs

The SEC approved nearly a dozen spot Bitcoin ETFs on January 10 in what was heralded as a “watershed” moment for the crypto industry, opening the door for investors to gain exposure to Bitcoin without

January 30, 2024
newsletter

Sign up for Analysis on
the Best Tech Stocks

https://bethtechnology.cdn.prismic.io/bethtechnology/e0a8f1ff-95b9-432c-a819-369b491ce051_Logo_Final_Transparent_IOFUND.svg
The I/O Fund specializes in tech growth stocks and offers in-depth research for Premium Members. Investors get access to a transparent portfolio, a forum, webinars, and real-time trade notifications. Sign up for Premium.

We are on social networks


Copyright © 2010 - 2024
Get Free Weekly Analysis on the Best Tech Stocks