Cloud security provider Zscaler (Nasdaq: ZS) recently reported its quarterly performance that outpaced market expectations. The company is leveraging AI technology to expand its product offerings and drive growth.

Zscaler’s Financials

Revenues for the second quarter grew 46% to $418.8 million, ahead of the market’s forecast of $410.7 million. Non GAAP EPS was $0.48 compared with the Street’s forecast of an EPS of $0.47.

Among key metrics, calculated billings for the quarter grew 40% to $482.3 million. Deferred revenues grew 44% to $1.175 billion.

For the third quarter, Zscaler expects revenue of $429-$431 million and an EPS of $0.49. The market was looking for revenues of $428.8 million and an EPS of $0.31.

Zscaler expects to end the current year with revenues of $1.591-$1.593 billion and an EPS of $1.63-$1.64. The Street had forecast revenues of $1.58 billion and an EPS of $1.54.

Zscaler’s AI Focus

Recently, Zscaler announced several advancements to its Digital Experience (ZDX) solution that provides end-to-end visibility and IT troubleshooting capabilities. The recent ZDX updates leverage AI-powered insights to provide the IT ops teams with detailed insights, diagnostics, and remediation tools. Its new AI-powered monitoring capabilities provide more transparency into the user experience and offer intelligent solutions for user issues and performance inefficiencies. Zscaler now also provides meeting quality metrics for WebEx to fine-tune the user experience.

ZDX has also implemented support for UCaaS applications like Microsoft Teams and Zoom so that service teams can maximize digital dexterity, and see significant improvement in IT Ops productivity. Teams will be able to deliver faster IT resolutions using AI and machine learning processes. ZDX automates root cause analysis to eliminate fragmented data. Its inbuilt integration with tools like ServiceNow will allow IT and service desk teams to quickly triage and resolve user complaints.

ZDX also integrates with Webex to present video conferencing quality insights, alongside device and network performance metrics, to instantly isolate root causes of poor experiences, and to ensure uninterrupted and productive meetings. Finally, ZDX now supports remote packet capture for complex network troubleshooting, even when the user device is not on the corporate network. Data is stored in local file systems, to comply with data privacy laws and supports deep tracing and adaptive traceroute visibility into applications.

Additionally, Zscaler also announced enhancements to its Posture Control, strengthening its cloud native application protection platform (CNAPP) capabilities. It integrated DLP and threat intelligence into Posture Control to make the only CNAPP that delivers an accurate cloud risk view by correlating risk impact and likelihood using sensitive data discovery and security signals. Research shows that 78% of organizations use more than 50 cyber security products. Traditionally, organizations are forced to either piece together point tools and vulnerability scanning, or rely on loosely integrated solutions. 

Zscaler Posture Control, combined with its data protection and threat prevention capabilities, helps organizations more effectively correlate and prioritize risk across their entire cloud estate, reducing the time, effort and resources needed to piece together these risks. Through the recent innovations organizations can now have improved risk identification, correlation and prioritization capabilities along with access to a single, agentless platform that continuously secures every stage of the application life cycle.

The market is pleased with Zscaler and its stock is trading at $155.98 with a market capitalization of $22.6 billion. It hit a 52-week low of $84.93 in May and a 52-week high of $194.21 in September last year.

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