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Zscaler Raises Annual Revenue Forecast Due to Rising Demand for Cybersecurity Services

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Zscaler (ZS.O) raised its revenue forecast for fiscal 2025 on Wednesday, reflecting growing demand for its cloud-based cybersecurity solutions. Shares of the California-based company surged 6% in after-hours trading.

Enterprises are increasingly investing in AI-powered cybersecurity services to combat the rise in digital scams and online hacking, driving sales for companies like Zscaler. As a result, the company now expects annual revenue for fiscal 2025 to fall between $2.64 billion and $2.65 billion, up from its previous forecast of $2.62 billion to $2.64 billion.

Zscaler also raised its adjusted earnings per share forecast to a range of $3.04 to $3.09, up from the previous expectation of $2.94 to $2.99 per share.

“Growing adoption of Zero Trust and AI is driving strong demand for our platform,” said Zscaler CEO Jay Chaudhry, highlighting the increasing reliance on their services for secure cloud access.

The company projected third-quarter revenue between $665 million and $667 million, slightly below the median analyst estimate of $667.4 million.

In the face of rising cybercrimes, data breaches, online scams, and high-profile hacks, businesses are ramping up their investment in cybersecurity. Zscaler posted second-quarter revenue of $647.9 million, exceeding analysts’ forecast of $635.6 million.

Wiz Appoints Fazal Merchant as President and CFO to Prepare for IPO

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Israeli cloud security firm Wiz has appointed veteran executive Fazal Merchant as its president and chief financial officer (CFO) to continue its rapid growth and pave the way for a U.S. initial public offering (IPO) in the next year.

Merchant’s appointment comes after the company turned down a reported $23 billion acquisition offer from Google’s parent company, Alphabet, in July. Wiz’s CEO Assaf Rappaport emphasized that the company’s focus would now be on an IPO and reaching an annual recurring revenue of $1 billion.

Currently, Wiz generates approximately $500 million in annual revenue, having grown significantly since its 2020 founding. The company serves half of the Fortune 100 companies and has raised $1.9 billion in private financing, with a valuation of $12 billion after raising $1 billion in May 2023.

Merchant, who previously served as co-CEO of U.S. cybersecurity firm Tanium and CFO of DreamWorks Animation, highlighted Wiz’s healthy liquidity and its strategy to prepare for the IPO. He noted that IPO readiness could take 12 months, or potentially longer, depending on market conditions.

Merchant also emphasized Wiz’s goal of becoming the leader in cloud security as the global shift to cloud computing continues, with only 15% of the world’s infrastructure in the cloud. As the company expands in Europe and Asia, it sees significant growth potential in the cybersecurity sector.