No. of Recommendations: 2
Looking at yahoo! analyst estimates, the high estimate for Zscaler has now materially increased to $281 million for the year. Getting closer and closer to my $285 prediction. MDB has increased their estimates for this year well above the $235 I had penned in.

This price to sale is arbitrary as long as the fundamentals continue. for 2020 analyst have Zscaler plugged in for only 29% growth. If that happens, then yes the prices to sale will come down, but at a higher revenue number. It may be a wash in the end.

For MDB analysts have 41% growth for 2020, so higher expectations.

From these low revenue numbers there is no reason either company cannot beat current estimates. But of course a lot depends on what is going on in the world. But their price to sales numbers are not a bubble, they are not arbitrary, and the number will not disappear as a matter of course. It will only change with a change in fundamentals. Even then, like with Nvidia, the price to sale ratio will probably stay around the same, it is just the projected revenues that will decline (e.g. Nvidia).

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No. of Recommendations: 3

I still think ZS could actually get to 300 million revenue for 2019.

In Q4 2018 they guided for $260 mil. 2019 revenue. We all saw this was low-balling. Now in Q1 2019 they already guided for $272 mil., that's an increase of 4,6%. If I assume they will continue to beat the high end of their forecast by 4,6% going forward, they would guide for $284.5 in Q3, $297.7 in Q3 and would eventually come in at 311.4 in Q4.

Probably I'm a bit too optimistic here. If they achieve 311.4 mil. revenues in 2019 that would be almost 64% growth yoy (in 2018 they grew "only" 51%). That sounds like a lot. But then again, raising the full year guidance every quarter is almost mandatory for a young public company of ZS's kind and I would assume that they probably try to account for that when they give their guidance. If you couple that with continued business momentum, which could also surprise management to the upside, it seems quite possible for them to get that 300 mil. milestone in 2019. Maybe that's what the market is assuming too, thus, the high multiple from day one?

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No. of Recommendations: 2
Not many Qs to go on as both young public companies.
I've taken the midpoint of guidance.


The last 2 Quarters, they've beat the guidance given from the previous call by between 7-10%.
A 7% beat gets us 71 million revenue next Q as opposed to 66 guided. Well on the way to your 285 target.


The last 3 quarters, beaten guidance between 4-10%. Take the midpoint beat and we'll get $250 million year end.

A rather meaningless exercise at this point due to the lack of history/data. But I'm going to start tracking it for some of these companies. Another data point to observe how much an individual companies' management sandbags, and whether they do it by a consistent amount.

Beat and raise is the name of the game, but by how much.
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