Zscaler Inc. stock fell in the extended session Thursday after the cybersecurity company hiked its revenue forecast for the year while announcing layoffs.
Zscaler
ZS,
shares dropped 12% after hours, following a 4.4% gain in the regular session to close at $134.13.
The company said in a filing with the Securities and Exchange Commission it was trimming its global workforce by 3%, or about 150 positions, by the end of fiscal 2023, which ends in July, and taking an $8 million to $10 million charge. Zscaler last reported a headcount of 4,975.
The company also expects full-year earnings of $1.52 to $1.53 on about $1.56 billion revenue and billings of $1.94 billion to $1.95 billion.
Zscaler had last forecast adjusted earnings of $1.23 to $1.25 a share on revenue of about $1.53 billion and billings of $1.93 billion to $1.94 billion for the year, and analysts were estimating $1.24 a share on revenue of $1.53 billion and billings of $1.93 billion for the year.
“Even in this difficult macroeconomic environment, we continue to see customers consolidate multiple point products onto our integrated Zero Trust security platform for better security and lower cost,” said Jay Chaudhry, Zscaler chair and chief executive, in a statement. “We believe that strong customer interest in our platform, together with the growth in our annual recurring revenue base, supports the increase to our fiscal year guidance.”
Zscaler forecast adjusted earnings of about 39 cents a share on revenue of $396 million to $398 million for the fiscal third quarter. Analysts surveyed by FactSet had estimate 31 cents a share on revenue of $387.3 million and billings of $448.6 million for the quarter.
The company reported a fiscal second-quarter loss of $57.5 million, or 40 cents a share, compared with a loss of $100.4 million, or 71 cents a share, in the year-ago period. Adjusted net income, which excludes stock-based compensation and other items, was 37 cents a share, compared with 13 cents a share in the year-ago period.
Revenue rose to $387.6 million from $255.6 million in the year-ago quarter, the company said. Calculated billings, or revenue plus deferred revenue acquired over the quarter, rose to $493.8 million from $367.7 million from the year-ago period.
Analysts surveyed by FactSet had forecast earnings of 29 cents a share on revenue of $340.7 million and billings of $491 million, based on Zscaler’s forecast of 29 cents to 30 cents a share on revenue of $365.5 million to $366 million .
Read: These ‘Three Horsemen’ of cybersecurity most likely to weather slowing demand, Morgan Stanley says
Cloud-software vendors are still trying to snag deals in a cost-conscience environment as businesses slow spending a looming recession. By adding new services, or modules, to the platform, customers are then upsold, encouraged to add more modules, or functionality, to their customized platform.
That’s the model supporting identity-management software company Okta Inc.
OKTA,
which late Wednesday said the bulk of its businesses was in upsells and cross-sells to established customers, and Wall Street said the company was “partially out of the woods.”
Back in January, Morgan Stanley downgraded Zscaler and other cybersecurity names in the believe that “peak” cybersecurity has passed and that investors must get more selective in the sector.
Meanwhile, human-resources cloud-software company Workday Inc.
WDAY,
said earlier in the week it was still on track for growth targets, despite a setback, and offer a conservative guidance.
As of Thursday’s close, Zscaler’s stock is down 47% over the past 12 months, compared with a 9% loss by the S&P 500 index
SPX,
a 17% decline by the tech-heavy Nasdaq Composite Index
COMP,
and a 20% drop on the ETFMG Prime Cyber Security ETF
HACK,
