September 13, 2021 8:00 AM
 — 
3
 min

Strong results lead to better company valuation

buy

Zscaler released strong financial results for the fourth fiscal quarter, which exceeded market expectations. The company's revenue rose 57% yoy to $ 197.1 million, and earnings per share increased 70% yoy to $ 0.14. The strong quarter was driven by the expansion of the company's product line in all market segments, verticals and geographic regions of presence. We believe that by the end of the first fiscal quarter of 2022, the company will be able to earn revenue of $ 211 million (+ 48% yoy), and net income per share at the level of $ 0.12. We estimate that Zscaler will have revenues of $ 940-950mn for the full fiscal year 2022, and earnings per share will increase to $ 0.52-0.56. We raise our target fair value for the company's shares from $ 255 to $ 314.

TIKR
ZS

PRICE
$271

TARGET RPICE
$314

UPSIDE
16%

S&P 500
4,475(+0.39%)

WTI СRUDE
70,66(+0.82%)

10Y UST
1.341(0.00%)

BITCOIN
$44,080(-0.51%)

We love the business model of Zscaler. First, the company's business growth is driven by a healthy market environment, namely WFA, migration of corporate clients to the cloud, and favorable regulation. Secondly, the scalable Zscaler platform works well with both new and existing customers. The new Zscaler cloud security platform is highly popular in the enterprise segment, so the company has every chance of ousting vendors of legacy network security solutions from the market and increasing market share at the expense of corporate customers moving to cloud solutions. Third, additional opportunities for business growth will be WFA, cloud security solutions and the development of infrastructure for next generation 5G networks. Finally, the growing adoption of innovative products such as Zscaler Cloud Protection (ZCP) for cloud security and Zscaler Digital Experience (ZDX) for performance monitoring will support the company's financial growth over the medium term.

Zscaler was founded in 2008 by Jay Chaudhry, CEO/Chairman and Founder, with a mission to provide fast, secure, and reliable access to information no matter where it lives. Jay’s original vision that the internet would become the new corporate network as the cloud becomes the new data center is still at the heart of Zscaler’s current architecture. Zscaler is built to capitalize on the proliferation of cloud migration and workforce mobility trends where traditional perimeter network security solutions may simply no longer be sufficient to fully protect an organization. The core component of Zscaler is the cloud security software platform that represents a tectonic paradigm shift in the fundamental way engineers think about network architecture design based on zero trust and SASE. Zscaler's differentiations the cloud native multi-tenant platform maximized for efficiency in its single, light-weight platform, the Zscaler Zero Trust Exchange. Zscaler is headquartered San Jose, California.

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