Zscaler Posts Q4 Beat , Stock Tanks On Red Canary Contribution To Guidance - Zscaler ( NASDAQ : ZS )

<p>Shares of Zscaler Inc <a href="https://www.benzinga.com/quote/ZS">(NASDAQ:</a><a href="https://www.benzinga.com/quote/ZS">ZS</a>) tanked in early trading on Friday, despite the company’s <a href="https://www.benzinga.com/analyst-stock-ratings/price-target/26/02/50927193/zscaler-analysts-slash-their-forecasts-after-q2-results">upbeat fiscal second-quarter report</a>.</p>
<p>Here are the key analyst insights:</p>
<p>Check out <a href="https://www.benzinga.com/analyst-stock-ratings">other analyst stock ratings</a>.</p>
<p>Citizens JMP Securities: Although Zscaler reported its quarterly results ahead of expectations, investors remain concerned about "inorganic contribution," Walsh said in a note. Excluding Red Canary's ARR of $114 million, the company's net-new ARR rose 7% year-on-year to $139 million, he added.</p>
<p>Management guided to revenue of $834 million-$836 million and non-GAAP earnings of $1.00-$1.01 per share, higher than consensus of $832.0 million and 97 cents per share, he added. "Ex-Red Canary, guidance implies organic net-new ARR growth of 9.5%, which is representative of a raise from 6.7% in prior guidance," he further wrote.</p>
<p>Rosenblatt Securities: Zscaler delivered "another strong quarter, beating across all guidance metrics," Trebnick said. Investors seem concerned about Red Canary's contribution to guidance, rather than any deterioration in the core business, she added.</p>
<p>"Underlying demand signals remain robust," with large-deal momentum driving NNARR of $156 million and RPO growing around 31% year-on-year to $6.1 billion, the analyst stated. Customers generating more than $100,000 and $1 million in ARR grew 18% year-on-year to 3,886 and 728, respectively, "and the company delivered a record number of +$1M ACV deals for a Q2," she further wrote.</p>
<p>ZS Price Action: Shares of Zscaler had declined by 14.84% to $142.52 at the time of publication on Friday.</p>
<p>Image: Shutterstock</p>
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