On Tuesday, Zscaler (NASDAQ:ZS), a cybersecurity company with a market capitalization of $32 billion and impressive revenue growth of 34% year-over-year, maintained its Outperform stock rating alongside a steady price target of $238.00, following a robust first-quarter performance for fiscal year 2025. The company's earnings surpassed expectations by 3.5% compared to the consensus and prompted an increase in the full-year 2025 guidance equivalent to the earnings beat.
The positive results were attributed to the improved sales effectiveness after a significant sales team transformation. Zscaler had experienced a considerable turnover in its sales team in the third fiscal quarter of 2024, but has since recovered.
The company now reports that employee churn has dropped below their target rate. Additionally, year-over-year incremental expansion from existing customers is believed to be near the previous quarter's peak levels.
According to InvestingPro data, the company maintains impressive gross profit margins of 78% and is expected to achieve profitability this year. These metrics are expected to be confirmed in the upcoming publication of the 10-Q report.
The company's outlook remains optimistic, with expectations of more ramped representatives than originally planned. Zscaler's strategic initiatives appear to have paid off, leading to a solid start for the fiscal year and setting a confident tone for the upcoming quarters.
For deeper insights into Zscaler's valuation and growth potential, check out the comprehensive analysis available on InvestingPro, which includes 8 additional key tips for investors. The company's performance and forward-looking statements underline its resilience and potential for sustained growth in the competitive cybersecurity market.
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