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Investors Business Daily
Investors Business Daily

Zscaler Falls As COO Resigns Amid Management Changes

Zscaler fell Monday after the cybersecurity firm said Chief Operating Officer Dali Rajic had suddenly resigned. Zscaler announced the move late Friday and also said it would release fiscal second quarter earnings for ZS stock on Feb. 29.

In afternoon trading on the stock market today, Zscaler stock fell 4.9% to close at 232.05. While announcing that fiscal Q2 earnings will be released Feb. 29, the cybersecurity firm didn't reiterate guidance, noted RBC Capital analyst Matthew Hedberg in a report.

San Jose, Calif.-based Zscaler recently hired a new chief revenue officer, Mike Rich, formerly at ServiceNow. It also has hired a new chief marketing officer, Joyce Kim, from Twilio.

"While the news is a surprise to us given Mr. Rajic's recent promotion to COO and strong executive history with the company as a sales leader, recall that Mike Rich joined Zscaler as CRO from ServiceNow on Nov. 27 while Mr. Rajic transitioned out of sales," said Hedberg in a report.

Zscaler Stock: Missed Targets?

He added: "Overall our checks are positive on Zscaler, but regardless, we are surprised with how quickly Mr. Rajic is leaving the company without any transition period."

At Deutsche Bank, analyst Brad Zelnick in a report said Rajic's departure was not surprising.

"While Mr. Rajic has an accomplished 20-year-plus track record leading high performing sales organizations, including more than quintupling billings in his four years at Zscaler, we note this transition follows the company missing its internal (above guidance) revenue and billings targets in fiscal 2023."

Zelnick added: "This also comes at a time when Zscaler is increasingly selling a broader platform with multiple product pillars, not unlike what ServiceNow did very successfully during Mr. Rich's 12 year tenure at the company."

ZS Stock Jumped In 2023

Zscaler provides cloud-based cybersecurity services via 150 data centers worldwide. Zscaler's web security gateways inspect customers' data traffic for malware.

Further, the Zscaler Private Access, or ZPA cloud service, replaces virtual private networks, or VPNs, to support remote work.

ZS stock had climbed 81% over the past 52 weeks. Also, Zscaler stock had a Relative Strength Rating of 98 out of a best-possible 99, according to IBD Stock Checkup.

Follow Reinhardt Krause on X, formerly called Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.

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