Shares in Zscaler Inc. rose by more than 8% in late trading today after the cloud security company impressed investors with earnings and revenue beats in its fiscal 2025 second quarter.

For the quarter that ended on Jan. 31, Zscaler reported adjusted earnings per share of 78 cents, up from 63 cents in the same quarter of the previous fiscal year, on revenue of $647.9 million, up 23% year-over-year. Both figures were ahead of the 69 cents per share and revenue of $634.4 million expected by analysts.

Zscaler saw billings in the quarter of $743 million, up 18% year-over-year, with remaining performance obligations as of the end of the quarter rising 28%, to $4.6 billion.

The company ended the quarter with 3,291 customers with $100,000 or more in annual recurring revenue, up 17% year-over-year, and 620 customers spending $1 million or more annually, up 25%. Zscaler’s customers are also sticking around, as the company ended the quarter with a 115% dollar-based net retention rate.

Business highlights in the quarter include the November launch of Zero Trust Segmentation, a solution that offers more secure, agile and cost-effective means to connect users, devices and workloads across distributed locations.

The offering eliminates the need for traditional firewalls, software-defined wide-area networks and site-to-site virtual private networks by turning branches, factories and cloud environments into isolated, secure “virtual islands.” These environments connect directly to the Zscaler cloud platform, which enforces business policies to prevent ransomware spread, secure internet of things and operational technology systems, and reduce network complexity.

The solution improves customers’ security posture by preventing lateral movement from ransomware attacks while cutting firewall and infrastructure spending in half.

Zscaler also started offering its Zero Trust Network Access service natively integrated within RISE with SAP. Zscaler Private Access for SAP helps enable SAP customers with on-premises ERP workloads to simplify and de-risk their cloud migration without the complexity and risk associated with traditional virtual private networks.

“Growing adoption of Zero Trust and AI is driving strong demand for our platform, resulting in yet another strong quarter that exceeded our guidance on both top and bottom line,” Chief Executive Jay Chaudhry said in the company’s earnings release. “We are leading the industry towards Zero Trust Everywhere by transforming security from legacy appliance-based to a Zero Trust architecture.”

For its fiscal third quarter, Zscaler expects adjusted earnings per share of 75 to 76 cents on revenue of $665 million to $667 million. The revenue outlook was ahead of the $634.4 million expected by analysts.

For the full fiscal year, the company expects adjusted earnings per share of $3.04 to $3.09 on revenue of $2.64 billion to $2.654 billion. The revenue outlook was short of the $2.69 billion expected by analysts, but not enough to worry investors.

Image: SiliconANGLE/Ideogram