I think Zscaler is up big today because Symmantec just turned in a stinker of a quarter last night missing on revenue and crappy guidance to boot. Enterprise billings were down 24%!!! A while back Symmantec purchased bluecoat (which is part of their enterprise product) which directly competes with Zscaler. This little excerpt is from their conference call as calling out what was their biggest headwind.
Our ProxySG and Web Security Service product plus advanced threat detection protection bundle has been the biggest surprise providing us headwinds. The ProxySG business, which is the Blue Coat hardware proxy bundle has fallen off quicker than we anticipated and as a result, we have not experienced as large a refresh cycle as we expected
Basically this means they Zscaler is eating Symmantec’s lunch in what was supposed to be their growth business. Their new CEO had this to say,
The cause is clear, the move to the cloud was much quicker than thought. We were behind with our product offering, but today, are back with superior performance to our competitor, supported by a growth rate twice the market growth, but unfortunately from a much smaller base. At our current share gain rate, I’m optimistic for the future.
Personally I think Symmantec’s offering has some structural issues such as expensive hardware and forklift upgrades. I’m not sure they can, “improve” their way out of this one. Zscaler is a new paradigm that is as far as I know, faster, cheaper, better.
Some more And as I spoke about it in my text, we, in fact, have strengthened that cloud offering, so we think we have that piece fixed. But the fact that the customer moves, we don’t want to try to force the customer not to go where they want. So we’re in a much better position to retain our key customers into the cloud now that we’ve improved the product. But the fact that our hardware business is declining more rapidly than we anticipated, that’s what led to this downward position.
Symmantec is hurting, Enterprise has fallen off the cliff. The company has shuffled their senior leadership and retooled their cloud/enterprise offering. I’ll be honest. At this point I don’t know if the retooling of their Enterprise offering is a threat to Zscaler but I’ll say this. Zscaler has massively disrupted Symmantec. Last quarter Symmantec seemed like they didn’t know what hit them with comments like “lengthening sales cycles” blah blah blah. This quarter, Symmantec knows exactly what hit them…Zscaler. Going to be interesting to see ZS’s earnings release.
All the best,