Zscaler, a cloud security firm, reported a wider net loss in the second quarter due to increased spending on sales, marketing, and research and development (R&D) amid a competitive market landscape. This led to a 9% drop in the company’s shares during extended trading.
The cybersecurity industry is facing challenges as IT budgets remain constrained and clients are cautious about large deals amid economic uncertainties. Despite this, cybersecurity budgets are under less pressure compared to general capital outlays.
Zscaler specializes in cloud-based zero trust security, aiming to replace legacy firewalls and virtual private networks (VPNs) by authenticating each connection individually rather than granting broad network access.
The company’s increased expenses resulted in a net loss of $34.3 million in the quarter ended January 31, significantly higher than the $7.7 million loss from the previous year. Operating expenses rose to $676.3 million from $539.5 million in the same period last year, mainly driven by sales, marketing, and R&D costs.
Zscaler’s revenue for the second quarter surged by 26% to $815.8 million, surpassing analysts’ expectations. The company’s adjusted profit per share of $1.01 also exceeded estimates, with a positive outlook for the third quarter in terms of earnings and revenue.
Source: Tech-Economic Times