Zscaler, Inc. (Nasdaq: ZS), the leader in cloud security, today announced financial results for its first quarter of the fiscal year 2022, which ended October 31, 2021.
“CISOs and CIOs are looking to phase out legacy network security in favor of zero trust architecture, due to increasing cyber and ransomware risks and accelerating digital transformation. This architecture shift continues to drive strong demand for our Zero Trust Exchange platform,” said Jay Chaudhry, Chairman and CEO of Zscaler. “We delivered outstanding results for the first quarter, with year-over-year revenue growth accelerating to 62%. We recently achieved a significant milestone of surpassing $1 billion in annual recurring revenue (ARR), and are now focusing on achieving $5 billion in ARR.”
First Quarter Fiscal 2022 Financial Highlights
Revenue: $230.5 million, an increase of 62% year-over-year.
Income (loss) from operations: GAAP loss from operations was $74.4 million, or 32% of total revenue, compared to $42.7 million, or 30% of total revenue, in the first quarter of fiscal 2021. Non-GAAP income from operations was $23.9 million, or 10% of total revenue, compared to $19.7 million, or 14% of total revenue, in the first quarter of fiscal 2021.
Net income (loss): GAAP net loss was $90.8 million, compared to $55.0 million in the first quarter of fiscal 2021. Non-GAAP net income was $21.0 million, compared to $20.0 million in the first quarter of fiscal 2021.
Net income (loss) per share: GAAP net loss per share was $0.65, compared to $0.41 in the first quarter of fiscal 2021. Non-GAAP net income per share was $0.14, compared to $0.14 in the first quarter of fiscal 2021.
Cash flow: Cash provided by operations was $93.3 million, or 40% of revenue, compared to $53.5 million, or 38% of revenue, in the first quarter of fiscal 2021. Free cash flow was $83.4 million, or 36% of revenue, compared to $42.2 million, or 30% of revenue, in the first quarter of fiscal 2021.
Deferred revenue: $647.8 million as of October 31, 2021, an increase of 74% year-over-year.
Cash, cash equivalents, and short-term investments: $1,584.6 million as of October 31, 2021, an increase of $82.1 million from July 31, 2021.
In a separate management commentary, Zscaler said its customers include more than 100 government agencies and “federal integrators.” The company added more than 20 new federal customers during the quarter, including four with more than $1m in annual contract value.
Zscaler said Biden’s cybersecurity order has sparked interest in the company’s zero-trust exchange overall levels of government. The firm is participating in a National Institute of Standards and Technology project designed to improve cybersecurity standards.
Zscaler (Nasdaq: ZS) accelerates digital transformation so customers can be more agile, efficient, resilient, and secure. The Zscaler Zero Trust Exchange protects thousands of customers from cyberattacks and data loss by securely connecting users, devices, and applications in any location. Distributed across more than 150 data centers globally, the SASE-based Zero Trust Exchange is the world’s largest in-line cloud security platform.
Financial Statement :
|Condensed Consolidated Statements of Operations|
|(in thousands, except per share amounts)|
|Three Months Ended|
|Cost of revenue (1) (2)||52,169||31,727|
|Sales and marketing (1) (2)||153,786||96,889|
|Research and development (1)||65,216||35,770|
|General and administrative (1) (3)||33,717||20,859|
|Total operating expenses||252,719||153,518|
|Loss from operations||(74,371||)||(42,667||)|
|Interest expense (4)||(13,835||)||(13,049||)|
|Other income (expense), net||(589||)||268|
|Loss before income taxes||(88,322||)||(54,508||)|
|Provision for income taxes||2,479||498|
|Net loss per share, basic and diluted||$||(0.65||)||$||(0.41||)|
|Weighted-average shares used in computing net loss per share, basic and diluted||139,296||133,452|
(1) Includes stock-based compensation expense and related payroll taxes as follows:
|Cost of revenue||$||5,319||$||3,266|
|Sales and marketing||43,464||32,654|
|Research and development||28,570||14,900|
|General and administrative||18,741||9,509|
(2) Includes amortization expense of acquired intangible assets as follows:
|Cost of revenue||$||2,056||$||1,504|
|Sales and marketing||170||73|
|(3) Includes asset impairment related to facility exit as follows:||$||—||$||416|
|(4) Includes amortization of debt discount and issuance costs as follows:||$||13,476||$||12,690|