Having rallied 125% from May all the way into last week's Thanksgiving holiday, investors were clearly expecting good things from Zscaler Inc's (NASDAQ: ZS) latest earnings report. The cyber-security titan reported their fiscal Q1 earnings after the bell rang to end Monday's session, and they didn't disappoint. 

Right off the bat, they smashed analyst expectations for the headline numbers, with revenue showing year-on-year growth of 40% and earnings per share coming in a full 35% higher than the consensus. In addition, the company's net loss was effectively cut in half from the same quarter last year, which helped net income more than double.

Upside guidance

Beyond the strong performance for the quarter just ended, Zscaler's leadership offered strong forward guidance that also topped even the upper range of what analysts had been expecting. Looking ahead to their fiscal Q2, revenue for the quarter is now expected to land between $505 million and 507 million, well ahead of the previous forecast of $497 million. Revenue for the full fiscal year was also above expectations, as was net income. All in all, this is a solid report from a company that's still recovering from a brutal 2022. 

In the wake of an all-time high in November 2021, Zscaler was, as a high-growth stock, a textbook candidate for a rude awakening as interest rates soared in the face of red-hot inflation. Just as the cheap cost of borrowing in the years beforehand had fuelled so much of their gains, the surging cost meant that shares had no problem losing more than 75% of their value through last May. 

Recovery rally

But since the bears ran out of steam at the start of that month, it's been a whole other story. The company's gone from strength to strength, shown some unexpected resilience, and, in many ways, is coming out of this stronger than ever before. The strength seen in Monday's report is lending further support to this. 

Yesterday, the team at Wedbush reiterated their Outperform rating on Zscaler stock, saying that the company's "execution in both growing in an aggressive manner and maintaining costs are indicative of its success." They boosted their price target on the stock up to $210, and that gap is already being closed, with shares trading up Wednesday morning to their highest level since May of last year. 

The solid performance and increased demand prove that even amid a challenging macroeconomic landscape, Zscaler is maintaining its standing as a standout player in cybersecurity, particularly as the momentum behind the shift to cloud cybersecurity intensifies. It bodes well for the coming year, especially at a time when inflation continues to cool and the Fed inches closer to the end of its tightening cycle. 

Getting involved

For those of us on the sidelines and considering a position, there's a lot to like here. The company is reporting record quarterly revenues and is closer to achieving profitability than it's ever been. Considering the shock of having to watch the stock crater back to 2019 levels, this is no mean feat. And even though shares have been rallying hard, there's every reason to think this rally is just getting started. 

The stock has not yet undone half of the damage from last year and is still an 80% run away from touching 2021's highs. With the company's fundamentals performing as they are, alongside the prospect of an actual rate cut becoming a real option in 2024, there hasn't been a better time to own Zscaler shares in years. 

Look for shares to continue consolidating above $200 in the coming weeks, with a move above $230 indicating they've got some real bite in them. This is the first line of resistance to overcome, and if they can do that, this could soon become a 200% rally.