ZeroFox Holdings Inc delivered solid third quarter fiscal 2024 financial results, beating the midpoint of revenue guidance by 16% in a tough environment, according to Jefferies analysts.
In an update to clients, the analysts noted that profitability is a key focus for the cybersecurity company and believes ZeroFox is making progress in achieving that goal following two straight quarters of positive free cash flow.
"Non-GAAP software gross margins of 73% for its faster growing subscription business should also help drive future potential profitability and we believe this can improve further over time," the analysts wrote.
Other positives include strong large deal momentum, as ZeroFox reported 27% plus growth in subscription customers with more than $100,000 in Annual Recurring Revenue (ARR), they added.
Analysts at Jefferies, however, view Zerofox shares as being fairly priced in the near-term given limited cash reserves ($30 million) versus its high debt level.
They have a ‘Hold’ rating on the stock with an $0.85 per share price target.
Shares of ZeroFox closed 7% lower at $0.62 on Wednesday and have fallen 88% year to date.
Contact Sean at sean@proactiveinvestors.com