Zscaler Exceeds Expectations with Strong Q1 2025 Performance
Zscaler, a leading provider of cloud security solutions, has reported a strong first quarter (Q1) for fiscal year 2025. The company's revenue grew by 26% year-over-year, while bookings growth accelerated to over 30%, driven by increasing customer commitments to its Zero Trust Exchange platform and growing interest in its AI solutions.
In a conference call on December 2, 2024, Zscaler's Chairman and CEO, Jay Chaudhry, highlighted the company's success in exceeding its guidance for Q1. Revenue growth of 26% was impressive, especially considering the challenging market conditions. The company also reported billings growth of 13%, which far exceeded the recent average growth rate of publicly traded legacy network security vendors by over 10 percentage points.
The strong demand for Zscaler's products has enabled the company to increase its full-year guidance for billings and revenue. Q1 was a solid quarter for profitability, with operating profit growing by 50% year-over-year. The company also delivered new Q1 records for operating margin of 21% and free cash flow margin of 46%. This places Zscaler among the top handful of the 145 largest public SaaS companies in terms of revenue growth and free cash flow margin.
According to Jay Chaudhry, CXOs are prioritizing Zero Trust security and AI for their IT spending. In response to this trend, Zscaler is investing in AI innovations that enable customers to securely adopt public AI apps such as ChatGPT, Microsoft CoPilot, and Getacopilot. The company's industry-leading capabilities in this area have driven large customer wins, including a 7-figure ACV deal with a Global 2000 technology services customer.
Zscaler is also providing visibility and control into public AI apps used by employees, scoring the risk level of AI apps, and storing prompt queries for logging or auditing purposes. The company's AI-powered data protection solution has been particularly successful in enabling customers to securely roll out Microsoft CoPilot and Office 365.
The strong performance of Zscaler in Q1 2025 is a testament to the company's success in executing its go-to-market plans and driving innovation that meets customer needs. With continued strong demand and increasing customer commitments, Zscaler is well-positioned for future growth and success."
