Have you assessed how the international operations of Zscaler (ZS) performed in the quarter ended January 2025? For this cloud-based information security provider, possessing an expansive global footprint, parsing the trends of international revenues could be critical to gauge its financial resilience and growth prospects.

In today's increasingly interconnected global economy, a company's ability to tap into international markets can be a pivotal factor in shaping its overall financial health and growth trajectory. For investors, understanding a company's reliance on overseas markets has become increasingly crucial, as it offers insights into the company's sustainability of earnings, ability to tap into diverse economic cycles and overall growth potential.

Being present in international markets serves as a counterbalance to domestic economic challenges while offering chances to engage with more rapidly evolving economies. However, this kind of diversification introduces challenges like currency fluctuations, geopolitical uncertainties and varying market trends.

While analyzing ZS' performance for the last quarter, we found some intriguing trends in revenues from its overseas segments that Wall Street analysts commonly model and monitor.

For the quarter, the company's total revenue amounted to $647.9 million, experiencing an increase of 23.4% year over year. Next, we'll explore the breakdown of ZS' international revenue to understand the importance of its overseas business operations.

Unveiling Trends in ZS' International Revenues

Europe, Middle East and Africa accounted for 29.77% of the company's total revenue during the quarter, translating to $192.91 million. Revenues from this region represented a surprise of -0.26%, with Wall Street analysts collectively expecting $193.42 million. When compared to the preceding quarter and the same quarter in the previous year, Europe, Middle East and Africa contributed $186.07 million (29.63%) and $164.01 million (31.24%) to the total revenue, respectively.

Asia Pacific generated $102.82 million in revenues for the company in the last quarter, constituting 15.87% of the total. This represented a surprise of +6.13% compared to the $96.88 million projected by Wall Street analysts. Comparatively, in the previous quarter, Asia Pacific accounted for $99.38 million (15.83%), and in the year-ago quarter, it contributed $79.08 million (15.06%) to the total revenue.

Of the total revenue, $23.78 million came from Other International during the last fiscal quarter, accounting for 3.67%. This represented a surprise of +6.03% as analysts had expected the region to contribute $22.43 million to the total revenue. In comparison, the region contributed $23.19 million, or 3.69%, and $17.94 million, or 3.42%, to total revenue in the previous and year-ago quarters, respectively.

International Revenue Predictions

Wall Street analysts expect Zscaler to report a total revenue of $665.81 million in the current fiscal quarter, which suggests an increase of 20.4% from the prior-year quarter. Revenue shares from Europe, Middle East and Africa, Asia Pacific and Other International are predicted to be 30.2%, 15.3% and 3.6%, corresponding to amounts of $200.86 million, $101.58 million and $23.64 million, respectively.

For the full year, a total revenue of $2.65 billion is expected for the company, reflecting an increase of 22.1% from the year before. The revenues from Europe, Middle East and Africa, Asia Pacific and Other International are expected to make up 30%, 15.4% and 3.6% of this total, corresponding to $793.5 million, $406.47 million and $94.49 million respectively.

Wrapping Up

Zscaler's leaning on foreign markets for its revenue stream presents a mix of chances and challenges. Therefore, a vigilant watch on its international revenue movements can greatly aid in projecting the company's future direction.

In an era of growing international interdependencies and escalating geopolitical disputes, Wall Street analysts are vigilant in tracking these trends for businesses with a global reach, in order to refine their predictions of earnings. It should be noted, however, that a multitude of other elements, such as a company's domestic position, also play a significant role in shaping the earnings forecasts.

We at Zacks strongly focus on the dynamic earnings forecast of companies, given that empirical studies have demonstrated its potent impact on the immediate price movement of stocks. Invariably, there's a positive relationship -- upward earnings predictions often result in an increase in stock prices.

The Zacks Rank, our proprietary stock rating mechanism, demonstrates a notable performance history confirmed through external audits. It effectively utilizes the power of earnings estimate revisions to act as a predictor of a stock's price performance in the near term.

At present, Zscaler holds a Zacks Rank #3 (Hold). This ranking implies that its near-term performance might mirror the overall market movement. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Exploring Recent Trends in Zscaler's Stock Price

Over the past month, the stock has lost 8.4% versus the Zacks S&P 500 composite's 7.3% decrease. The Zacks Computer and Technology sector, of which Zscaler is a part, has declined 11.7% over the same period. The company's shares have declined 4.8% over the past three months compared to the S&P 500's 6.7% decline. Over the same period, the sector has declined 11%.

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This article originally published on Zacks Investment Research (zacks.com).

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