Zscaler Reports Strong Q1 Results, Guides Q4 EPS Above Consensus, Stocks Spike

Zscaler reported strong Q1 results, beating earnings estimates by $0.22 and surpassing revenue expectations. The company reported a 32% year-over-year increase in revenue and a 30% year-over-year increase in billings, with a dollar-based net retention rate (DBNRR) of 116%. Zscaler's adjusted diluted EPS rose by 83% year-over-year, and free cash flow (FCF) increased by 63%, with an FCF margin of 22%. The company also reported having 523 customers with contracts over $1 million, a 30% increase year-over-year. For fiscal year 2024, Zscaler provided revenue guidance in the range of $2.14 to $2.142 billion and guided Q4 EPS above consensus. Following the announcement, Zscaler's stock spiked as the market reacted positively to the strong earnings and optimistic Q4 forecast.