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According to a recent report, the global cybersecurity market is projected to grow at 13% CAGR from $245.62 billion in 2024 to $500.70 billion by 2030. This surge is fueled by the increased adoption of smart devices and the widespread deployment of cloud services that require advanced security solutions. Cloud security provider Zscaler’s (Nasdaq: ZS) recent quarterly performance that outpaced market expectations. The company continues to expand its AI offerings through acquisitions.

Zscaler’s Financials

Zscaler’s third quarter revenues grew 23% to $678 million, surpassing analyst expectations of $667 million. Non-GAAP earnings of $0.84 were also ahead of the consensus estimate of $0.76.

Its calculated billings rose 25% to $784.5 million, and deferred revenue grew by 26% to nearly $2 billion.

Looking ahead, Zscaler raised its full-year fiscal 2025 revenue guidance to $2.659-$2.661 billion, up from the previous forecast of $2.640-$2.654 billion. It anticipates calculated billings between $3.184-$3.189 billion, and non-GAAP earnings per share in the range of $3.18-$3.19. The market was looking for revenues of $2.65 billion for the year and an EPS of $3.06.

Zscaler’s Red Canary Acquisition

Earlier this quarter, Zscaler announced its acquisition of Red Canary, a Denver-based leader in Managed Detection and Response (MDR), for an estimated $675 million. Founded in 2013 by Brian Beyer and Keith McCammon, Red Canary has established itself as a pioneer in the MDR space, delivering high-fidelity threat detection and response across endpoints, identities, networks, and cloud workloads.

It is best known for its AI-driven workflows that help achieve a 99.6% accuracy rate in threat detection and accelerate the speed at which security teams investigate threats. By integrating Red Canary’s advanced MDR services with Zscaler’s Zero Trust Exchange platform, Zscaler aims to offer a unified solution that automates threat detection and response, reduces investigation times, improves overall security outcomes, and builds an AI-driven approach into its security operations platform.

Prior to its acquisition, Red Canary was privately funded and had raised $129.9 million in funding across multiple rounds. In its last round in February 2021, it raised $81 million in a round led by Summit Partners with participation from existing investors Noro-Moseley Partners and Access Venture Partners. Valuation from the funding rounds were not disclosed.

The market is pleased with Zscaler and its stock is trading at a 52-week high of $317.06 with a market capitalization of $49.2 billion. It has recovered from the year low of $153.45 that it had fallen to in September last year.

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