The provider manages access to the application, including security, availability, and performance. Capabilities such as DLP, compliance, and industry regulation solutions and advanced malware prevention are attracting enterprises to use SaaS security solutions. Due to multiple benefits, CSPM providers are now integrating SaaS into CSPM zscaler revenue solutions to offer a single solution for SaaS and IaaS-based cloud security services. Companies such as AppOmni and Adaptive Shield are some of the few companies offering SaaS-based CSPM solutions. We are maintaining our fair value estimate of $265 per share for narrow-moat Zscaler after it reported strong second-quarter results.
Zscaler annual revenue for 2020 was $0.431B, a 42.41% increase from 2019. Zscaler annual revenue for 2021 was $0.673B, a 56.07% increase from 2020. Final Report will add the analysis of the impact of COVID-19 on this industry. While some companies compete with neighboring businesses for customers, other companies may compete to attract skilled employees.
In this article, we explore the trends in the financial and operational metrics of the cyber-security vendors that have grown their revenue the fastest. They all have high net revenue retention rates , have made acquisitions to address missing capabilities and target segments of the cyber-security market that are rapidly expanding. Provide specific products and services to you, such as portfolio management or data aggregation. The best cybersecurity stocks to own are changing amid a shift to remote work and cloud security. Zscaler stock jumped in 2020 amid a corporate shift to remote work during the early coronavirus crisis.
U S Industry Overview & Market Statistics: Custom Computer Programming & Software Development Services
Many companies report non-GAAP earnings in addition to their earnings based on Generally Accepted Accounting Principles . These pro forma figures, which exclude “one-time” transactions, can sometimes provide a more accurate measure of a company’s financial performance from direct business operations. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks. We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management.
CEO of Zscaler tells Jim Cramer that recurring revenue could grow five-fold.https://t.co/1jROWoSjHK
— TheStreet (@TheStreet) March 14, 2022
Zscaler Internet Access securely connects externally managed applications regardless of device, location or network. It becomes the choke-point for all internet traffic and ensures malware doesn’t come in and internal data doesn’t get out. It does this through a variety of products like access control, threat prevention and data protection. Zscaler’s second main service, Private Access, secures internally managed applications hosted on premise or on private or public clouds.
Zscaler Revenue 2016
As businesses move to the cloud, users, data and applications no longer reside within the traditional corporate perimeter or network, creating large gaps in IT security. Zscaler’s mission is to “empower organizations to realize the full potential of the cloud and mobility by securely connecting users to applications from any device, anywhere”. The surface area vulnerable to attacks within enterprises has increased dramatically, opening the door for more security breaches. Traditional perimeter approaches are fracturing due to trends like workforce mobility, the move to the cloud, and the dramatic increase in volume and sophistication of attacks. Enterprises need to address these risks while still delivering great user experiences and maintaining expensive, legacy security systems.
When APIs and the SDLCs they support to rely on perimeter-based security, they often fail to stop attacks. APIs are becoming one of the fastest-growing threat vectors, given how quickly devops teams create them to support new digital growth initiatives. A good place to start is to define API management and web application firewalls that secure APIs while protecting privileged access credentials and identity infrastructure data. CISOs also need to consider how their teams can identify the threats in hidden APIs and document API use levels and trends. Finally, there needs to be a strong focus on API security testing and a distributed enforcement model to protect APIs across the entire infrastructure. The business benefits of APIs are real, as programmers employ them for speedy development and integration.
What Cisos Need To Know About Zero Trust
Our outstanding capped call transactions are antidilutive under GAAP but are expected to mitigate the dilutive effect of our convertible notes and therefore are included in the calculations of non-GAAP diluted shares outstanding. DoD agencies can now leverage this provisional authorization as the foundation to procure and implement ZPA for securing their applications and user base by issuing agency-specific Authorization to Operate . Our outstanding capped call transactions are antidilutive under GAAP, but are expected to mitigate the dilutive effect of our convertible notes and therefore are included in the calculations of non-GAAP diluted shares outstanding.
Zscaler’s cloud-native platform helps IT teams simplify multi-cloud workload connectivity by moving away from traditional IP-based routing and VPNs between cloud environments to expedite enterprises’ cloud transformation initiatives. Cloud-base Security Software, or Cloud Security Software are used to protect the cloud data or information from hacking, deletion, any online theft, leakage, etc. It includes firewalls, identity and access, encryption, data protection and other technologies that can be used to protect cloud data, applications, and infrastructure from threats. With a market capitalization of $33.5 billion, more than $1.62 billion in cash and with free cash flow over the last twelve months being positive, the company is in a very strong position to invest in growth. As you can see below, Zscaler’s revenue growth has been incredible over the last year, growing from quarterly revenue of $157 million, to $255.5 million. Maintaining independence and editorial freedom is essential to our mission of empowering investor success.
Crowdstrikes Revenue Continues To Grow Much More Quickly Than That Of Any Other Major Cyber
Zooming out, we think this was a great quarter and shareholders will likely feel excited about the results. But the market might have been expecting more from this high-valuation stock and the company is down 16.6% on the results and currently trades at $219.73 per share. “While Zscaler’s valuation is rich on every metric, we believe that ZS’s technology leadership, large potential total addressable market and durable growth rate warrant a premium valuation,” said BMO Capital Markets analyst Keith Bachman in a report. “Further, we believe that ZS stock has significant upside tension to 2022 billings guidance.” We exclude the in-the-money portion of our convertible senior notes for non-GAAP weighted-average diluted shares as they are covered by our capped call transactions.
- Moreover, most of their customers route all their web traffic through Zscaler’s platform.
- Our outstanding capped call transactions are antidilutive under GAAP, but are expected to mitigate the dilutive effect of our convertible notes and therefore are included in the calculations of non-GAAP diluted shares outstanding.
- Revenue can be defined as the amount of money a company receives from its customers in exchange for the sales of goods or services.
- A competitive analysis shows these companies are in the same general field as Zscaler, even though they may not compete head-to-head.
- Zscaler, the leading cloud security platform, filed for a $100M IPO with Morgan Stanley leading the offering.
- Automated checkers aren’t strong at validating unprotected endpoints, for example, making continued learning, certifications and training needed.
Zscaler continues to achieve revenue expansion to the tune of 63% year over year behind secular tailwinds stemming from organizations making digital transformations and increased adoption of zero-trust security. As expected, Zscaler’s expanded product offering has enabled it to not only up- and cross-sell but to increase switching costs for its existing customers. These factors were on display as its dollar-based net retention rate was above 125% for the quarter. Newer product ZDX has been a notable component in Zscaler’s ability to upsell large customers through its ZIA bundle.
Financial Services & Investing
With industry-standard accuracy in analysis and high data integrity, the report makes a brilliant attempt to unveil key opportunities available in the global Cloud-base Security Software market to help players in achieving a strong market position. Buyers of the report can access verified and reliable market forecasts, including those for the overall size of the global Cloud-base Security Software market in terms of revenue. Zscaler, Inc. shares rose more than 25% during Thursday’s session after the cloud software company reported better-than-expected fiscal first quarter financial results. Zscaler is likely to trade more like a high-growth SaaS company given they are nearly a 100% cloud-based / subscription business. NTM (next-twelve-months) revenue will be a primary valuation metric along with 2018 and 2019 CY revenue estimates.
The report expands to cover regional market data along with type and application. Given Zscaler’s product suite stretches across a wide range of security markets, they believe their TAM is $17.7B annually based on IDC data. Their products span across URL filtering, anti-virus, https://xcritical.com/ content filtering, branch firewalls, advanced threat protection, sandboxing and data loss prevention markets. For inbound gateways, products typically include load balancers, DDoS prevention, external firewalls, VPN concentrators and internal firewall appliances.
ZPA ensures that only authorized users have access to specific private applications without providing access to the network. ZPA creates secure segments of one between an authenticated user and a named application, brokering the connection in the Zscaler Zero Trust Exchange. We use our GAAP provision for income taxes for purposes of determining our non-GAAP income tax expense. The difference between our GAAP and non-GAAP income tax expense represents the effects of stock-based compensation expense recognized in foreign jurisdictions.
98–99% of their revenue is subscription and they are at $176M of implied ARR , also up 51% YoY. Zscaler is losing money but margins are improving — in the most recent quarter they had a $(6.4)M operating loss, a % margin. That is up from a $(9.3)M operating loss and % margin in the prior year. Okta’s strong focus on upselling is a key reason behind its high revenue growth rate. Its TTM dollar-based net retention rate was 121–123% throughout 2020 and has consistently been around 120% for the last 3 years.
The guide is noteworthy in its insights into the areas CISOs need to concentrate on to excel with their ZTNA strategies. Identities are the new security perimeter, and the Gartner guide provides prescriptive guidance on how to take that challenge on. AWS’ IAM module centralizes identity roles, policies and Config Rules yet still doesn’t go far enough to protect more complex multicloud configurations. AWS provides excellent baseline support forIdentity and Access Managementat no charge as part of their AWS instances. CISOs and the enterprises they serve need to evaluate how the AWS IAM configurations enable zero trust security across all cloud instances. By taking a “never trust, always verify, enforce least privilege” strategy when it comes to their hybrid and multicloud strategies, organizations can alleviate costly breaches that harm the long-term operations of any business.
This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar. Additional information will also be set forth in other filings that we make with the SEC from time to time. Pursuing a zero trust or ZTNA strategy is a business decision as a technology one. But, as Gartner’s 2022 Market Guide for Zero Trust Network Access illustrates, the most successful implementations begin with a strategy supported by a roadmap. How core concepts of zero trust removing any trust from a tech stack is foundational to any successful ZTNA strategy.
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. CISOs and their teams continue to be stretched too thin, supporting virtual workforces, transitioning workloads to the cloud and developing new applications. Adopting a ZTNA-based approach to endpoint security is helping to save the IT and security team’s time by securing IT infrastructure and operations-based systems and protecting customer and channel identities and data.
Company Profile & Annual Report For Zscaler
Gartner predictsthis year that 50%t of enterprises will unknowingly and mistakenly expose some applications, network segments, storage, and APIs directly to the public, up from 25% in 2018. By 2023, nearly all (99%) ofcloud security failureswill be tracked back to manual controls not being set correctly. As the leading cause of hybrid cloud breaches today, CIOs and CISOs need to pay to have every member of their team certified who is working on these configurations. Automating configuration checking is a start, but CIOs and CISOs need to keep scanning and audit tools current while overseeing them for accuracy. Automated checkers aren’t strong at validating unprotected endpoints, for example, making continued learning, certifications and training needed.
The growing use of Cloud-base Security Software in recycling processes across a variety of sectors is driving up market demand. The true strength index is a momentum oscillator used to provide trade signals based on overbought/oversold levels, crossovers, and divergence. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Investopedia does not include all offers available in the marketplace.
Its partnership with AWS, which began in 2018, is also showing strong signs of success. CrowdStrike’s annual recurring revenue transacted through the AWS Marketplace surpassed USD50 million in 4Q 2020 and grew by 650% year-on-year in 2020. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 150% since the IPO last December. Given that these returns are generally positive, long-term shareholders are likely bullish going into this earnings release.
Zscaler is positioned as the vendor with the highest ‘Ability to Execute’ among the 11 vendors that were recognized for this report. Based on components, the Cloud Security Posture Management Marketis segmented into solutions and services. CSPM solution provides visibility into the public cloud infrastructure of an organization, including cloud resources, compliance, and cloud configurations. CSPM solutions provide the necessary cloud visibility to detect and prevent configuration errors before they cause a breach. Some CSPM solutions may even leverage AI to predict where risks are likely to arise in the future. In the COVID-19 pandemic, the increasing data and traffic on the public cloud and lack of expertise in cloud configurations have made cloud resources more vulnerable than in previous years.
In fiscal 2017, Zscaler had almost $6M in litigation-related expenses, and the Symantec proceedings are likely a big piece of that. These products span across a wide area of security markets — Zscaler has products in web security, a cloud firewall, advanced threat protection, anti-virus, data loss prevention and cloud application control. Moreover, most of their customers route all their web traffic through Zscaler’s platform. Similarly to CrowdStrike, Zscaler has a modular approach to its offering and a ‘map’ of how to drive the customer take-up of additional solutions. Zscaler claimed a net promoter score of +76 at the end of 2020, and its TTM dollar-based net retention rate was 122% in December 2020. Other drivers of its revenue growth include a strong focus on growing the portion of sales that are partner-sourced, technical alliances with Microsoft, AWS and CrowdStrike and making acquisitions to address missing capabilities.
Ahead of the earnings results the analysts covering the company were estimating sales to grow 37.2% over the next twelve months. For the current quarter ending in January, the company expects earnings of 11 cents a share amid higher investments in its sales force. Zscaler expects revenue of $241 million vs. estimates of $224.8 million. ISO is a globally recognized standard for the establishment and certification of an information security management system. Since that initial certification, Zscaler has achieved a number of additional certifications, including ISO 27701, ISO 27018, ISO 27017, SOC 2 Type II, and SOC 3. Worst of all, perimeter networks by design rely on interdomain trust relationships, exposing entire networks at once.