Zscaler, Inc. (Nasdaq: ZS), the leader in cloud security,
today announced financial results for its first quarter of fiscal
year 2025
, ended October 31, 2024.
“Growing customer engagements and strong sales
execution drove a solid Q1 with all metrics exceeding our guidance.
The combination of Zero Trust and AI is creating exciting new
opportunities, which we are well positioned to capture with our
large and expanding platform,” said Jay Chaudhry, Chairman and CEO
of Zscaler. “With our customer obsession, the world’s largest
cybersecurity cloud, and an upleveled go-to-market machine, we are
driving strong growth.”
First Quarter
Fiscal 2025 Financial
Highlights
-
Revenue: $628.0 million, an increase
of 26% year-over-year.
-
Income (loss) from operations: GAAP loss from
operations was $30.7 million, or 5% of revenue,
compared to $46.1 million, or 9% of revenue, in
the first quarter of fiscal 2024. Non-GAAP income from
operations was $134.1 million, or 21% of revenue,
compared to $89.7 million, or 18% of revenue, in
the first quarter of fiscal 2024.
-
Net income (loss): GAAP net loss
was $12.1 million, compared to $33.5 million in
the first quarter of fiscal 2024. Non-GAAP net income
was $124.3 million, compared to $86.4 million in
the first quarter of fiscal 2024.
-
Net income (loss) per share, diluted: GAAP net
loss per share was $0.08, compared to $0.23 in
the first quarter of fiscal 2024. Non-GAAP net
income per share was $0.77, compared to $0.55 in the first quarter
of fiscal 2024.
- Cash flows: Cash provided by operations
was $331.3 million, or 53% of revenue, compared to $260.8
million, or 53% of revenue, in the first quarter of
fiscal 2024. Free cash flow was $291.9 million,
or 46% of revenue, compared to $224.7 million, or 45% of
revenue, in the first quarter of fiscal 2024.
-
Deferred revenue: $1,783.7 million as of October
31, 2024, an increase of 27% year-over-year.
-
Cash, cash equivalents and short-term investments:
$2,707.9 million as of October 31, 2024, an increase of
$298.2 million from July 31, 2024.
Recent Business Highlights
- Zscaler’s cloud security platform
reached a new scalability milestone, surpassing half a trillion
daily transactions, which is nearly 60 times greater than the total
number of Google searches per day. This milestone underscores the
unparalleled scalability, resilience, and trust customers have
placed in the Zscaler platform, which enables organizations to
secure users, applications, and devices, while simplifying
operations and consolidating costs.
- Appointed Adam Geller as Chief
Product Officer to accelerate Zscaler’s next phase of innovation
and growth. Geller’s proven security product and engineering
experience will be invaluable to the development of Zscaler’s
AI-driven security operations platform.
- Announced a set of AI and Zero
Trust integrations with the CrowdStrike Falcon® cybersecurity
platform to advance security operations by providing advanced
threat detection, response, and risk management.
- Announced four new integrations
with Okta designed to accelerate joint customers' Zero Trust
transformation by delivering end-to-end, context-aware security.
Together, Okta and Zscaler are helping customers reduce risk,
improve the user experience, and enable cross-domain response
through shared telemetry and threat intelligence.
- Published the Zscaler ThreatLabz
2024 Mobile, IoT, and OT Threat Report, which provides detailed
insights covering mobile and IoT/OT cyber threat landscape from
June 2023 through May 2024. ThreatLabz found that the Zscaler cloud
blocked 45% more IoT malware transactions than last year–indicating
botnets continue to proliferate across IoT devices.
Change in Non-GAAP Measures
Presentation
Effective August 1, 2024, the beginning of our
fiscal year ending July 31, 2025, we are using a long-term
projected non-GAAP tax rate of 23% for the purpose of determining
our non-GAAP net income and non-GAAP net income per share to
provide better consistency across interim reporting periods in
fiscal 2025 and beyond. Given the significant growth of our
business and non-GAAP operating income, we believe this change is
necessary to better reflect the performance of our business. We
will continue to assess the appropriate non-GAAP tax rate on a
regular basis, which could be subject to changes for a variety of
reasons, including the rapidly evolving global tax environment,
significant changes in our geographic earnings mix, or other
changes to our strategy or business operations. Prior period
amounts have been recast to reflect this change.
Financial Outlook
For the second quarter of fiscal 2025, we expect:
- Revenue of $633
million to $635 million
- Non-GAAP income from operations of $126 million to $128
million
- Non-GAAP net income
per share of approximately $0.68 to $0.69,
assuming approximately 163 million fully diluted shares
outstanding and a non-GAAP tax rate of 23%
For the full year of fiscal 2025, we expect:
- Revenue
of approximately $2.623 billion to $2.643 billion
- Calculated billings
of $3.124 billion to $3.149 billion
- Non-GAAP income from
operations of $549 million to $559 million
- Non-GAAP net income
per share of $2.94 to $2.99, assuming approximately 164
million fully diluted shares outstanding and a non-GAAP tax rate of
23%
These statements are forward-looking and actual
results may differ materially. Refer to the Forward-Looking
Statements safe harbor below for information on the factors that
could cause our actual results to differ materially from these
forward-looking statements.
Guidance for non-GAAP income from operations
excludes stock-based compensation expense and related employer
payroll taxes, amortization of debt issuance costs, and
amortization expense of acquired intangible assets. We have not
reconciled our expectations of non-GAAP income from operations and
non-GAAP net income per share to their most directly
comparable GAAP measures because certain items are out of our
control or cannot be reasonably predicted. For those reasons, we
are also unable to address the probable significance of the
unavailable information, the variability of which may have a
significant impact on future results. Accordingly, a reconciliation
for the guidance for non-GAAP income from operations and non-GAAP
net income per share is not available without unreasonable
effort.
For further information regarding why we believe
that these non-GAAP measures provide useful information to
investors, the specific manner in which management uses these
measures, and some of the limitations associated with the use of
these measures, please refer to the "Explanation of Non-GAAP
Financial Measures" section of this press release.
Conference Call and Webcast Information
Zscaler will host a conference call for analysts and investors
to discuss its first quarter of fiscal 2025 and outlook for its
second quarter of fiscal 2025 and full year fiscal 2025 today at
1:30 p.m. Pacific time (4:30 p.m. Eastern time).
Date: |
Monday, December 2, 2024 |
Time: |
1:30 p.m. PT |
Webcast: |
https://ir.zscaler.com |
Dial-in: |
To join by phone, register at the
following link:
(https://register.vevent.com/register/BIe2c2c82d1e694dd3a00b3debc6f30548).
After registering, you will be provided with a dial-in number and a
personal PIN that you will need to join the call. |
|
|
Upcoming Conferences
Second quarter of fiscal 2025 investor conference participation
schedule:
- UBS Global Technology and AI Conference in ScottsdaleWednesday,
December 4, 2024
- BTIG Virtual Software ForumMonday, December 9, 2024
- Scotiabank Annual Global Technology Conference in San
FranciscoTuesday, December 10, 2024
- Barclays Annual Global Technology Conference in San
FranciscoWednesday, December 11, 2024
- Needham Growth ConferenceThursday, January 9, 2025 and Friday,
January 10, 2025
Sessions which offer a webcast will be available on the Investor
Relations section of the Zscaler website at
https://ir.zscaler.com/
Forward-Looking Statements
This press release contains forward-looking
statements that involve risks and uncertainties, including, but not
limited to, statements regarding our future financial and operating
performance, including our financial outlook for the second quarter
of fiscal 2025 and full year fiscal 2025. There are a significant
number of factors that could cause actual results to differ
materially from statements made in this press release, including
but not limited to: macroeconomic influences and instability,
geopolitical events, operations and financial results and the
economy in general; risks related to the use of AI in our platform;
our limited operating history; our ability to identify and
effectively implement the necessary changes to address execution
challenges; risks associated with managing our rapid growth,
including fluctuations from period to period; our limited
experience with new products and subscriptions and support
introductions and the risks associated with new products and
subscription and support offerings, including the discovery of
software bugs; our ability to attract and retain new customers; the
failure to timely develop and achieve market acceptance of new
products and subscriptions as well as existing products and
subscription and support; rapidly evolving technological
developments in the market for network security products and
subscription and support offerings and our ability to remain
competitive; length of sales cycles; useful lives of our assets and
other estimates; and general market, political, economic and
business conditions.
Additional risks and uncertainties that could
affect our financial results are included under the captions “Risk
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” set forth from time to time in
our filings and reports with the Securities and Exchange Commission
("SEC"), including our Annual Report on Form 10-K for the fiscal
year ended July 31, 2024, filed on September 12, 2024, as well as
future filings and reports by us, copies of which are available on
our website at ir.zscaler.com and on the SEC’s website at
www.sec.gov. You should not rely on these forward-looking
statements, as actual outcomes and results may differ materially
from those contemplated by these forward-looking statements as a
result of such risks and uncertainties. Additional information will
also be set forth in other filings that we make with the SEC from
time to time. All forward-looking statements in this press release
are based on information available to us as of the date hereof, and
we do not assume any obligation to update the forward-looking
statements provided to reflect events that occur or circumstances
that exist after the date on which they were made.
Use of Non-GAAP Financial Information
We believe that the presentation of non-GAAP
financial information provides important supplemental information
to management and investors regarding financial and business trends
relating to our financial condition and results of operations. For
further information regarding why we believe that these non-GAAP
measures provide useful information to investors, the specific
manner in which management uses these measures, and some of the
limitations associated with the use of these measures, please refer
to the “Explanation of Non-GAAP Financial Measures” section of this
press release.
About Zscaler
Zscaler (Nasdaq: ZS) accelerates digital
transformation so customers can be more agile, efficient,
resilient, and secure. The Zscaler Zero Trust Exchange™ platform
protects thousands of customers from cyberattacks and data loss by
securely connecting users, devices, and applications in any
location. Distributed across more than 160 data centers globally,
the SSE-based Zero Trust Exchange is the world’s largest in-line
cloud security platform.
Zscaler™ and the other trademarks listed at
https://www.zscaler.com/legal/trademarks are either (i) registered
trademarks or service marks or (ii) trademarks or service marks of
Zscaler, Inc. in the United States and/or other countries. Any
other trademarks are the properties of their respective owners.
Investor Relations Contacts
Ashwin Kesireddy VP, Investor Relations and Strategic
Finance(415) 798-1475ir@zscaler.com
Natalia WodeckiMedia Relations Contactpress@zscaler.com
|
ZSCALER, INC. |
Condensed Consolidated Statements of
Operations |
(in thousands, except per share amounts) |
(unaudited) |
|
|
|
|
|
Three Months Ended |
|
October 31, |
|
|
2024 |
|
|
|
2023 |
|
Revenue |
$ |
627,955 |
|
|
$ |
496,703 |
|
Cost of revenue (1) (2) |
|
141,462 |
|
|
|
111,394 |
|
Gross profit |
|
486,493 |
|
|
|
385,309 |
|
Operating expenses: |
|
|
|
Sales and marketing (1) (2) |
|
306,087 |
|
|
|
267,111 |
|
Research and development (1) (2) |
|
154,254 |
|
|
|
113,539 |
|
General and administrative (1) |
|
56,819 |
|
|
|
50,716 |
|
Total operating expenses |
|
517,160 |
|
|
|
431,366 |
|
Loss from operations |
|
(30,667 |
) |
|
|
(46,057 |
) |
Interest income |
|
30,048 |
|
|
|
25,942 |
|
Interest expense (3) |
|
(3,143 |
) |
|
|
(3,159 |
) |
Other expense, net |
|
(652 |
) |
|
|
(1,212 |
) |
Loss before income taxes |
|
(4,414 |
) |
|
|
(24,486 |
) |
Provision for income taxes |
|
7,637 |
|
|
|
8,997 |
|
Net loss |
$ |
(12,051 |
) |
|
$ |
(33,483 |
) |
Net loss per share, basic and
diluted |
$ |
(0.08 |
) |
|
$ |
(0.23 |
) |
Weighted-average shares used
in computing net loss per share, basic and diluted |
|
152,557 |
|
|
|
147,625 |
|
|
|
|
|
|
|
|
|
(1) Includes stock-based compensation expense and related
payroll taxes as follows:
Cost of revenue |
$ |
15,793 |
|
|
$ |
12,955 |
|
Sales and marketing |
|
64,866 |
|
|
|
58,668 |
|
Research and development |
|
58,865 |
|
|
|
41,043 |
|
General and
administrative |
|
21,050 |
|
|
|
20,063 |
|
Total |
$ |
160,574 |
|
|
$ |
132,729 |
|
|
|
|
|
|
|
|
|
(2) Includes amortization expense of acquired intangible
assets as follows:
Cost of revenue |
$ |
3,675 |
|
|
$ |
2,717 |
|
Sales and marketing |
|
425 |
|
|
|
226 |
|
Research and development |
|
140 |
|
|
|
93 |
|
Total |
$ |
4,240 |
|
|
$ |
3,036 |
|
|
|
|
|
|
|
|
|
(3) Includes amortization of
debt issuance costs |
$ |
981 |
|
|
$ |
977 |
|
|
ZSCALER, INC. |
Condensed Consolidated Balance Sheets |
(in thousands) |
(unaudited) |
|
October 31, |
|
July 31, |
|
|
2024 |
|
|
|
2024 |
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
1,553,645 |
|
|
$ |
1,423,080 |
|
Short-term investments |
|
1,154,252 |
|
|
|
986,574 |
|
Accounts receivable, net |
|
424,573 |
|
|
|
736,529 |
|
Deferred contract acquisition costs |
|
152,475 |
|
|
|
148,873 |
|
Prepaid expenses and other current assets |
|
108,835 |
|
|
|
101,561 |
|
Total current assets |
|
3,393,780 |
|
|
|
3,396,617 |
|
Property and equipment,
net |
|
409,005 |
|
|
|
383,121 |
|
Operating lease right-of-use
assets |
|
84,091 |
|
|
|
89,758 |
|
Deferred contract acquisition
costs, noncurrent |
|
286,656 |
|
|
|
296,525 |
|
Acquired intangible assets,
net |
|
59,595 |
|
|
|
63,835 |
|
Goodwill |
|
417,029 |
|
|
|
417,029 |
|
Other noncurrent assets |
|
58,846 |
|
|
|
58,083 |
|
Total assets |
$ |
4,709,002 |
|
|
$ |
4,704,968 |
|
|
|
|
|
Liabilities and Stockholders’
Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
25,368 |
|
|
$ |
23,309 |
|
Accrued expenses and other current liabilities |
|
83,384 |
|
|
|
91,708 |
|
Accrued compensation |
|
126,379 |
|
|
|
160,810 |
|
Deferred revenue |
|
1,533,080 |
|
|
|
1,643,919 |
|
Convertible senior notes |
|
1,145,799 |
|
|
|
1,142,275 |
|
Operating lease liabilities |
|
49,600 |
|
|
|
50,866 |
|
Total current liabilities |
|
2,963,610 |
|
|
|
3,112,887 |
|
Deferred revenue,
noncurrent |
|
250,640 |
|
|
|
251,055 |
|
Operating lease liabilities,
noncurrent |
|
41,938 |
|
|
|
44,824 |
|
Other noncurrent
liabilities |
|
24,269 |
|
|
|
22,100 |
|
Total liabilities |
|
3,280,457 |
|
|
|
3,430,866 |
|
Stockholders’ Equity |
|
|
|
Common stock |
|
153 |
|
|
|
152 |
|
Additional paid-in
capital |
|
2,593,010 |
|
|
|
2,426,819 |
|
Accumulated other
comprehensive loss |
|
(4,487 |
) |
|
|
(4,789 |
) |
Accumulated deficit |
|
(1,160,131 |
) |
|
|
(1,148,080 |
) |
Total stockholders’ equity |
|
1,428,545 |
|
|
|
1,274,102 |
|
Total liabilities and stockholders’ equity |
$ |
4,709,002 |
|
|
$ |
4,704,968 |
|
|
ZSCALER, INC. |
Condensed Consolidated Statements of Cash
Flows |
(in thousands) |
(unaudited) |
|
Three Months Ended |
|
October 31, |
|
|
2024 |
|
|
|
2023 |
|
Cash Flows from Operating
Activities |
|
|
|
Net loss |
$ |
(12,051 |
) |
|
$ |
(33,483 |
) |
Adjustments to reconcile net
loss to cash provided by operating activities: |
|
|
|
Depreciation and amortization expense |
|
21,423 |
|
|
|
13,962 |
|
Amortization expense of acquired intangible assets |
|
4,240 |
|
|
|
3,036 |
|
Amortization of deferred contract acquisition costs |
|
39,068 |
|
|
|
30,111 |
|
Amortization of debt issuance costs |
|
981 |
|
|
|
977 |
|
Non-cash operating lease costs |
|
15,657 |
|
|
|
9,903 |
|
Stock-based compensation expense |
|
157,178 |
|
|
|
129,138 |
|
Accretion of investments purchased at a discount |
|
(5,003 |
) |
|
|
(3,199 |
) |
Unrealized losses on hedging transactions |
|
3,689 |
|
|
|
1,564 |
|
Deferred income taxes |
|
186 |
|
|
|
(43 |
) |
Other |
|
644 |
|
|
|
1,031 |
|
Changes in operating assets
and liabilities, net of effects of business acquisitions: |
|
|
|
Accounts receivable |
|
311,975 |
|
|
|
215,082 |
|
Deferred contract acquisition costs |
|
(32,801 |
) |
|
|
(27,680 |
) |
Prepaid expenses, other current and noncurrent assets |
|
(8,767 |
) |
|
|
1,349 |
|
Accounts payable |
|
1,043 |
|
|
|
4,596 |
|
Accrued expenses, other current and noncurrent liabilities |
|
(6,240 |
) |
|
|
4,859 |
|
Accrued compensation |
|
(34,431 |
) |
|
|
(39,232 |
) |
Deferred revenue |
|
(111,254 |
) |
|
|
(40,154 |
) |
Operating lease liabilities |
|
(14,202 |
) |
|
|
(11,011 |
) |
Net cash provided by operating activities |
|
331,335 |
|
|
|
260,806 |
|
Cash Flows from Investing
Activities |
|
|
|
Purchases of property, equipment and other assets |
|
(17,025 |
) |
|
|
(28,659 |
) |
Capitalized internal-use software |
|
(22,429 |
) |
|
|
(7,429 |
) |
Payments for business acquisitions, net of cash acquired |
|
— |
|
|
|
(4,377 |
) |
Purchase of strategic investments |
|
(561 |
) |
|
|
— |
|
Purchases of short-term investments |
|
(430,296 |
) |
|
|
(375,929 |
) |
Proceeds from maturities of short-term investments |
|
268,651 |
|
|
|
253,849 |
|
Net cash used in investing activities |
|
(201,660 |
) |
|
|
(162,545 |
) |
Cash Flows from Financing
Activities |
|
|
|
Proceeds from issuance of common stock upon exercise of stock
options |
|
890 |
|
|
|
1,256 |
|
Net cash provided by financing activities |
|
890 |
|
|
|
1,256 |
|
Net increase in cash and cash
equivalents |
|
130,565 |
|
|
|
99,517 |
|
Cash and cash equivalents at
beginning of period |
|
1,423,080 |
|
|
|
1,262,206 |
|
Cash and cash equivalents at
end of period |
$ |
1,553,645 |
|
|
$ |
1,361,723 |
|
|
ZSCALER, INC. |
Reconciliation of GAAP to Non-GAAP Financial
Measures |
(in thousands, except percentages) |
(unaudited) |
|
|
|
|
|
Three Months Ended |
|
October 31, |
|
2024 |
|
2023 |
|
|
|
|
Revenue |
$ |
627,955 |
|
|
$ |
496,703 |
|
|
|
|
|
Non-GAAP Gross Profit and
Non-GAAP Gross Margin |
|
|
|
GAAP gross profit |
$ |
486,493 |
|
|
$ |
385,309 |
|
Add: Stock-based compensation expense and related payroll
taxes |
|
15,793 |
|
|
|
12,955 |
|
Add: Amortization expense of acquired intangible assets |
|
3,675 |
|
|
|
2,717 |
|
Non-GAAP gross profit |
$ |
505,961 |
|
|
$ |
400,981 |
|
GAAP gross margin |
|
77 |
% |
|
|
78 |
% |
Non-GAAP gross margin |
|
81 |
% |
|
|
81 |
% |
|
|
|
|
Non-GAAP Income from
Operations and Non-GAAP Operating Margin |
|
|
|
GAAP loss from operations |
$ |
(30,667 |
) |
|
$ |
(46,057 |
) |
Add: Stock-based compensation expense and related payroll
taxes |
|
160,574 |
|
|
|
132,729 |
|
Add: Amortization expense of acquired intangible assets |
|
4,240 |
|
|
|
3,036 |
|
Non-GAAP income from
operations |
$ |
134,147 |
|
|
$ |
89,708 |
|
GAAP operating margin |
|
(5 |
)% |
|
|
(9 |
)% |
Non-GAAP operating margin |
|
21 |
% |
|
|
18 |
% |
|
ZSCALER, INC. |
Reconciliation of GAAP to Non-GAAP Financial
Measures |
(in thousands, except per share amounts) |
(unaudited) |
|
|
|
|
|
Three Months Ended |
|
October 31, |
|
|
2024 |
|
|
|
2023 |
|
Non-GAAP Net Income per Share,
Diluted |
|
|
|
GAAP net loss |
$ |
(12,051 |
) |
|
$ |
(33,483 |
) |
Add: GAAP provision for income taxes |
|
7,637 |
|
|
|
8,997 |
|
GAAP loss before income
taxes |
|
(4,414 |
) |
|
|
(24,486 |
) |
Add: |
|
|
|
Stock-based compensation expense and related payroll taxes |
|
160,574 |
|
|
|
132,729 |
|
Amortization expense of acquired intangible assets |
|
4,240 |
|
|
|
3,036 |
|
Amortization of debt issuance costs |
|
981 |
|
|
|
977 |
|
Non-GAAP net income before income taxes |
|
161,381 |
|
|
|
112,256 |
|
Non-GAAP provision for income taxes (1) |
|
37,118 |
|
|
|
25,819 |
|
Non-GAAP net income |
$ |
124,263 |
|
|
$ |
86,437 |
|
|
|
|
|
Add: Non-GAAP interest expense
related to the convertible senior notes |
|
359 |
|
|
|
359 |
|
Numerator used in computing
non-GAAP net income per share, diluted |
$ |
124,622 |
|
|
$ |
86,796 |
|
|
|
|
|
GAAP net loss per share,
diluted |
$ |
(0.08 |
) |
|
$ |
(0.23 |
) |
Stock-based compensation expense and related payroll taxes |
|
1.00 |
|
|
|
0.84 |
|
Amortization expense of acquired intangible assets |
|
0.03 |
|
|
|
0.02 |
|
Amortization of debt issuance costs |
|
0.01 |
|
|
|
0.01 |
|
Non-GAAP provision for income taxes adjustment (2) |
|
(0.18 |
) |
|
|
(0.11 |
) |
Non-GAAP interest expense related to the convertible senior
notes |
|
— |
|
|
|
— |
|
Adjustment to total fully diluted earnings per share (3) |
|
(0.01 |
) |
|
|
0.02 |
|
Non-GAAP net income per share,
diluted |
$ |
0.77 |
|
|
$ |
0.55 |
|
|
|
|
|
Weighted-average shares used
in computing GAAP net loss per share, diluted |
|
152,557 |
|
|
|
147,625 |
|
Add: Outstanding potentially dilutive equity incentive awards |
|
2,348 |
|
|
|
3,431 |
|
Add: Convertible senior notes |
|
7,626 |
|
|
|
7,626 |
|
Less: Antidilutive impact of capped call transactions (4) |
|
(1,235 |
) |
|
|
(177 |
) |
Weighted-average shares used
in computing non-GAAP net income per share, diluted |
|
161,296 |
|
|
|
158,505 |
|
___________________
(1) Effective August 1, 2024, the beginning of
our fiscal year ending July 31, 2025, we are using a long-term
projected non-GAAP tax rate of 23% for the purpose of determining
our non-GAAP net income and non-GAAP net income per share to
provide better consistency across interim reporting periods in
fiscal 2025 and beyond. Given the significant growth of our
business and non-GAAP operating income, we believe this change is
necessary to better reflect the performance of our business. We
will continue to assess the appropriate non-GAAP tax rate on a
regular basis, which could be subject to changes for a variety of
reasons, including the rapidly evolving global tax environment,
significant changes in our geographic earnings mix, or other
changes to our strategy or business operations. Prior period
amounts have been recast to reflect this change.
(2) Adjustment related to the difference between
the GAAP provision for income taxes and Non-GAAP provision for
income taxes.
(3) The sum of the fully diluted earnings per
share impact of individual reconciling items may not total to fully
diluted non-GAAP net income per share due to the weighted-average
shares used in computing the GAAP net loss per share differs from
the weighted-average shares used in computing the non-GAAP net
income per share, and due to rounding of the individual reconciling
items. The GAAP net loss per share calculation uses a lower share
count as it excludes potentially dilutive shares, which are
included in calculating the non-GAAP net income per share.
(4) We exclude the in-the-money portion of the
convertible senior notes for non-GAAP weighted-average diluted
shares as they are covered by our capped call transactions. Our
outstanding capped call transactions are antidilutive under GAAP
but are expected to mitigate the dilutive effect of the convertible
senior notes, and therefore are included in the calculation of
non-GAAP diluted shares outstanding. The capped calls have an
antidilutive impact when the average stock price of our common
stock in a given period is higher than their exercise price.
|
ZSCALER, INC. |
Reconciliation of GAAP to Non-GAAP Financial
Measures |
(in thousands, except percentages) |
(unaudited) |
|
|
|
|
|
Three Months Ended |
|
October 31, |
|
2024 |
|
2023 |
Calculated Billings |
|
|
|
Revenue |
$ |
627,955 |
|
|
$ |
496,703 |
|
Add: Total deferred revenue, end of period |
|
1,783,720 |
|
|
|
1,399,544 |
|
Less: Total deferred revenue, beginning of period |
|
(1,894,974 |
) |
|
|
(1,439,676 |
) |
Calculated billings |
$ |
516,701 |
|
|
$ |
456,571 |
|
|
|
|
|
Free Cash Flow |
|
|
|
Net cash provided by operating
activities |
$ |
331,335 |
|
|
$ |
260,806 |
|
Less: Purchases of property, equipment and other assets |
|
(17,025 |
) |
|
|
(28,659 |
) |
Less: Capitalized internal-use software |
|
(22,429 |
) |
|
|
(7,429 |
) |
Free cash flow |
$ |
291,881 |
|
|
$ |
224,718 |
|
|
|
|
|
Free Cash Flow Margin |
|
|
|
Net cash provided by operating
activities, as a percentage of revenue |
|
53 |
% |
|
|
53 |
% |
Less: Purchases of property, equipment and other assets, as a
percentage of revenue |
|
(3 |
)% |
|
|
(6 |
)% |
Less: Capitalized internal-use software, as a percentage of
revenue |
|
(4 |
)% |
|
|
(2 |
)% |
Free cash flow margin |
|
46 |
% |
|
|
45 |
% |
|
|
|
|
|
|
|
|
ZSCALER, INC.Explanation
of Non-GAAP Financial Measures
In addition to our results determined in
accordance with generally accepted accounting principles in the
United States of America ("GAAP"), we believe the following
non-GAAP measures are useful in evaluating our operating
performance. We use the following non-GAAP financial information to
evaluate our ongoing operations and for internal planning and
forecasting purposes. We believe that non-GAAP financial
information, when taken collectively, may be helpful to investors
because it provides consistency and comparability with past
financial performance. However, non-GAAP financial information is
presented for supplemental informational purposes only, as it has
limitations as an analytical tool and should not be considered in
isolation or as a substitute for financial information presented in
accordance with GAAP. In particular, free cash flow is not a
substitute for cash provided by operating activities. Additionally,
the utility of free cash flow as a measure of our liquidity is
further limited as it does not represent the total increase or
decrease in our cash balance for a given period. In addition, other
companies, including companies in our industry, may calculate
similarly titled non-GAAP measures differently or may use other
measures to evaluate their performance, all of which could reduce
the usefulness of our non-GAAP financial measures as tools for
comparison. A reconciliation of our historical non-GAAP financial
measures to their most directly comparable financial measures
stated in accordance with GAAP has been included in this press
release. Investors are cautioned that there are a number of
limitations associated with the use of non-GAAP financial measures
and key metrics as analytical tools. Investors are encouraged to
review these reconciliations, and not to rely on any single
financial measure to evaluate our business.
Expenses Excluded from Non-GAAP
Measures
Stock-based compensation expense is excluded
primarily because it is a non-cash expense that management believes
is not reflective of our ongoing operational performance. Employer
payroll taxes related to stock-based compensation, which is a cash
expense, are excluded because these are tied to the timing and size
of the exercise or vesting of the underlying equity incentive
awards and the price of our common stock at the time of vesting or
exercise, which may vary from period to period independent of the
operating performance of our business. Amortization expense of
acquired intangible assets and amortization of debt issuance costs
from the convertible senior notes are excluded because these are
non-cash expenses and are not reflective of our ongoing operational
performance.
Effective August 1, 2024, the beginning of our
fiscal year ending July 31, 2025, we are using a long-term
projected non-GAAP tax rate of 23% for the purpose of determining
our non-GAAP net income and non-GAAP net income per share to
provide better consistency across interim reporting periods. Given
the significant growth of our business and non-GAAP operating
income, we believe this change is necessary to better reflect the
performance of our business. We will continue to assess the
appropriate non-GAAP tax rate on a regular basis, which could be
subject to changes for a variety of reasons, including the rapidly
evolving global tax environment, significant changes in our
geographic earnings mix, or other changes to our strategy or
business operations. Prior period amounts have been recast to
reflect this change.
Non-GAAP Financial Measures
Non-GAAP Gross Profit and Non-GAAP Gross
Margin. We define non-GAAP gross profit as GAAP gross
profit excluding stock-based compensation expense and related
employer payroll taxes and amortization expense of acquired
intangible assets. We define non-GAAP gross margin as non-GAAP
gross profit as a percentage of revenue.
Non-GAAP Income from Operations and
Non-GAAP Operating Margin. We define non-GAAP income from
operations as GAAP loss from operations excluding stock-based
compensation expense and related employer payroll taxes and
amortization expense of acquired intangible assets. We define
non-GAAP operating margin as non-GAAP income from operations as a
percentage of revenue.
Non-GAAP Net Income per Share,
Diluted. We define non-GAAP net income as GAAP net loss
excluding stock-based compensation expense and related employer
payroll taxes, amortization expense of acquired intangible assets,
amortization of debt issuance costs, and the non-GAAP provision for
income taxes adjustment. We define non-GAAP net income per share,
diluted, as non-GAAP net income plus the non-GAAP interest expense
related to the convertible senior notes divided by the
weighted-average diluted shares outstanding, which includes the
effect of potentially diluted common stock equivalents outstanding
during the period and the anti-dilutive impact of the capped call
transactions entered into in connection with the convertible senior
notes.
Calculated Billings. We define
calculated billings as revenue plus the change in deferred revenue
in a period. Calculated billings in any particular period aims to
reflect amounts invoiced for subscriptions to access our cloud
platform, together with related support services for our new and
existing customers. We typically invoice our customers annually in
advance, and to a lesser extent quarterly in advance, monthly in
advance or multi-year in advance.
Free Cash Flow and Free Cash Flow
Margin. We define free cash flow as net cash provided by
operating activities less purchases of property, equipment and
other assets and capitalized internal-use software. We define free
cash flow margin as free cash flow divided by revenue. We believe
that free cash flow and free cash flow margin are useful indicators
of liquidity that provide information to management and investors
about the amount of cash generated from our operations that, after
the investments in property, equipment and other assets and
capitalized internal-use software, can be used for strategic
initiatives.
Zscaler (NASDAQ:ZS)
過去 株価チャート
から 11 2024 まで 12 2024
Zscaler (NASDAQ:ZS)
過去 株価チャート
から 12 2023 まで 12 2024