Two months after its $192 million IPO, Zscaler's COO is leaving and its stock is falling

Zscaler Jay Chaudhry color wide (1)Zscaler CEO Jay ChaudhryZscaler

  • The recently IPO's cloud security company Zscaler lost more than 7% in value on Thursday following news that its COO and head of sales Bill Welch will leave the company.
  • Zscaler CEO Jay Chaudhry said in a statement that Welch's departure had no impact on the company's third quarter financial results.
  • But the optics are bad, according to analysts at Barclays, even if Welch is leaving for a higher-level role at another company.

Zscaler's stock fell nearly 9% on Thursday following news that the recently public company's head of sales and chief operating officer plans to leave the company.

Bill Welch zscaler COOLinkedIn

Bill Welch will leave his role on May 14, after four years at the company, first as chief revenue officer and then as COO. He joined Zscaler out of executive roles at Symantec and then Hewlett-Packard.

Welch will take on "a more senior executive role at a leading technology company," according to a statement. It's unclear where he's going.

Despite Wall Street's reaction on Thursday, Zscaler CEO Jay Chaudhry said in a statement that Welch's departure had "no impact" on the company's upcoming third quarter financial results, which the company will announced on June 6.

Analysts, however, anticipated that the optics of the situation would take its toll on Zscaler's share price.

"Strategically, Mr. Welch is leaving for a more senior role at another technology company," Barclays analyst Saket Kalia said in a note early Thursday. "However, tactically seeing a head of sales depart on the heels of a successful IPO may get read negatively."

Zscaler, an enterprise cloud security company, took its shares public on March 16, raising $192 million. The company set its share price at $16, which shot up 75% to around $28 on the first day of trading.

Shares traded around $27.75 on Thursday, up from an all-time-low of $26.06.

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