Zscaler Focuses On AI Capabilities For Market Growth

zscaler

Global secure access service edge (SASE) market is projected to grow 26% annually to $4.1 billion by 2026 from $1.2 billion in 2021. Cloud security provider Zscaler (Nasdaq: ZS) recently reported its second-quarter results that outpaced market expectations.
 

Zscaler’s Financials

Revenues for the quarter grew 61% to $318.1 million, ahead of the market’s forecast of $305.4 million. On an adjusted basis, EPS increased to $0.25 from $0.14 a year ago and beat the Street’s forecast of an EPS of $0.21.

Among key metrics, calculated billings for the quarter grew 54% to $345.6 million. Deferred revenues grew 65% to $818.7 million.

For the current fiscal year, Zscaler expects revenue of $1.49-$1.5 billion and an EPS of $0.17. The market was looking for revenues of $1.468 billion and an EPS of $1.04. It forecast billings of $1.93 billion compared with the market’s estimates of $1.859 billion. Despite the current economic conditions, the company was confident of the demand for its Zero Trust Exchange platform to continue as businesses become more secure, simplifies IT, and reduces cost.
 

Zscaler’s Product Upgrades

Zscaler continued to advance its AI/ML capabilities for its products. The new capabilities have been added to its Zero Trust Exchange security platform that will enable organizations to implement Security Service Edge (SSE) and protect against the most advanced cyberattacks while delivering an improved digital experience to users and simplifying the adoption of a zero trust architecture.

Utilizing Zscaler’s AI-powered Zero Trust platform will allow organizations to strengthen their network defense by adding capabilities such as AI-powered phishing prevention that will detect and stop credential theft and browser exploitation from phishing pages, AI-powered segmentation that will simplify user-to-app segmentation to minimize the attack surface and stop lateral movement with AI-based policy recommendations, autonomous risk-based policy engine that dynamically adapts security and access policies in real-time, and an AI-powered root cause analysis capability to accelerate mean time to resolution.

It also recently announced its new Posture Control solution that will give organizations unified Cloud-Native Application Protection Platform (CNAPP) functionality that has been custom-made to secure cloud workloads. The Posture Control solution enables DevOps and security teams to efficiently prioritize and remediate risks in cloud-native applications earlier in the development lifecycle. It is a completely agentless solution that correlates and prioritizes risks, such as unpatched vulnerabilities in containers and VMs, excessive entitlements and permissions, and cloud service misconfigurations.

Additionally, the company continues to expand its target market within the government. It recently announced that its Internet Access solution had achieved FedRAMP High Authority to Operate from the FedRAMP Joint Authorization Board. This federal government certification will allow ZIA to meet the security requirements for civil agencies such as the Department of Defense (DoD) and other intelligence organizations.

Its stock is currently trading at $188 with a market capitalization of $26.67 billion. It had fallen to a year low of $125.12 in March this year. It had soared to a year-high of $376.11 in November last year.


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Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research ...

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