$17.6 billion Zscaler earnings blast past Wall Street expectations – here's why the CEO thinks it can be the Salesforce of cybersecurity by serving the new remote workforce

  • Cloud-based cybersecurity company Zscaler announced fourth quarter financial results that greatly exceeded expectations on Wednesday.
  • The firm, which has boomed during the COVID-19 shift to remote work, compared itself to cloud giants Salesforce and Netflix as it disrupts cybersecurity.
  • The company released three new products it says show a continued commitment to cloud-based security that will end on-premises security. 
  • CEO Jay Chaudhry says the company will continue to grow after COVID-19 remote work decreases, because cybersecurity is changing for good.
  • Visit Business Insider's homepage for more stories.

 

Comparing itself to disruptive cloud computing giants Netflix and Salesforce, Zscaler announced fourth quarter revenue on Wednesday of $125.9 million, a 46% year-over-year increase.

The results exceeded Wall Street expectations for the cloud security firm, which had a market cap of $17.6 billion before it announced earnings — though it was trading down about 1.75% in after hours trading at the time of writing.

"The market is coming to us," CEO Jay Chaudhry said on a call with investors after the results were announced. Chaudry compared Zscaler to Netflix and said its competitors, the legacy cybersecurity companies, were "stacking DVD players in the cloud."

Zscaler serves more than 4,000 companies, including 150 in the Fortune 500. Its cloud security platform serves customers with more than 150 data centers distributed globally to provide faster service to customers. 

Zscaler has boomed during the remote work caused by the COVID-19 epidemic as companies seeking to protect remote workers bought its cloud-based platform, which allows users to securely connect to applications regardless of device or location – without accessing a company's overall computer network. This allows remote workers to securely work with tools like Microsoft 365, Salesforce, or Box, without bringing cybersecurity vulnerabilities into the company network from their home networks. 

Despite a fourth-quarter net loss of $49.5 million compared to $5.3 million on a year-over-year basis – which it attributed to a 60% increase in sales staff and increased research and development – the company said it is "going to step on the gas" when it comes to expanding the business. Remo Canessa, the company's chief financial officer, said when it comes to profit versus growth, the firm is going to invest in growth. 

Chaudhry said he "sees no slowdown after COVID," and that a "work from anywhere" workforce model will "continue increased momentum in our business."   

Chaudhry and Chief Technical Officer Amit Sinha said in an interview with Business Insider that three new products rolled out Wednesday with the earnings announcement show how Zscaler will grow – and where they believe workforces will evolve. 

"These new products are expanding our market opportunity," Chaudhry said in the interview. "It's natural for us to expand in these ways that are more and more important in today's market." 

The new products released Wednesday reflect a greater investment in cloud computing and digital transformation as companies abandon thoughts of returning to normal in a traditional office. They are tools that further serve firms' needs to protect remote workers who need to shift how they work permanently to a cloud-based approach. 

The tools allow companies to scan their cloud computing assets for unapproved applications remote employees might have added, and to alert the company to cloud-computing configuration errors. They also build security around employees' web browsing, a growing concern in remote work, by streaming a web browser to employees' computers, while the actual pages are loaded on a protected company system. 

Sinha said the new product release is the most significant of the year for the company, and means "that we are now competing in other markets." 

Source: Read Full Article