Key Takeaways Zscaler shares fell 0.6% in six months as major cybersecurity peers posted gains above 87%.Zscaler expects fiscal 2027 revenue and ARR growth of roughly 17%, down from 25% in fiscal 2026.Capital spending may reach the low teens of revenues in FY27, with free cash flow margins near 23%-23.5%. Zscaler, Inc. (ZS - Free Report) has struggled to keep pace with the broader cybersecurity sector. The stock has fallen 0.6% over the past six months, while the broader Zacks Security industry has gained 84.8%.
The performance gap becomes even more striking when compared with major peers, including Palo Alto Networks, Inc. (PANW - Free Report) , CrowdStrike Holdings, Inc. (CRWD - Free Report) and Fortinet, Inc. (FTNT - Free Report) . Palo Alto Networks, CrowdStrike and Fortinet have surged 103.5%, 93.4% and 87.3%, respectively, during the same period.
Zscaler 6-Month Price Return Performance
Image Source: Zacks Investment Research
This raises an important question for investors: Is Zscaler simply being overlooked, or is the weak stock performance signaling deeper problems
The numbers suggest the latter may be the bigger concern.
Zscaler’s Growth Story Is Losing MomentumZscaler's biggest problem is no longer its position in the cybersecurity market. It is the pace at which the business is growing.
For years, Zscaler was known for delivering revenue growth above 40%. That growth rate has steadily declined. In the fourth quarter of fiscal 2026 and for the full fiscal year, revenues increased 25% year over year. Annual recurring revenues (ARR) also rose 25% to $3.77 billion at the end of the fourth quarter.
While 25% growth is still respectable, it is a major slowdown for a company once viewed as one of the fastest-growing cybersecurity stocks.
ZS expects growth to weaken further in fiscal 2027. Zscaler is projecting roughly 17% growth in both revenues and ARR. Management has pointed to several reasons for the weaker outlook, including changes in sales leadership and execution uncertainties surrounding new product integrations.
The Zacks Consensus Estimate for fiscal 2027 revenue growth is in line with management’s guidance and points to another slowdown in fiscal 2028, with revenues expected to increase only 15.7%.
Zscaler Sales Estimates
Image Source: Zacks Investment Research
ZS’ Rising Spending Is Another Major ConcernZscaler is also spending more to support its long-term growth plans. The rapid adoption of artificial intelligence (AI) is creating new opportunities for cybersecurity companies. However, AI workloads also require more computing, memory, storage and networking capacity. Rising infrastructure costs are putting additional pressure on Zscaler's spending.
Capital expenditures accounted for 8.3% of fiscal 2026 revenues, up from 6.1% in fiscal 2025. Management expects capital spending to remain elevated in fiscal 2027 and potentially reach the low-teens percentage of revenues.
Higher investment can be justified when it leads to faster growth. The problem for Zscaler is that spending is rising, while revenue and ARR growth are expected to slow.
Free cash flow also reflects this pressure. Zscaler's free cash flow margin declined to 23% in fiscal 2026 from 27% in fiscal 2025. Management expects the margin to remain around 23%-23.5% in fiscal 2027.
Macroeconomic uncertainty, tariffs and geopolitical tensions add to the near-term risks. These factors could keep customers cautious about technology spending and make it harder for Zscaler to regain its previous growth rate.
Zscaler’s Cheap Valuation Could Be a TrapZscaler looks cheap compared with other cybersecurity stocks. The company currently trades at around 6.63 times forward 12-month sales, well below the 17.05 times for the broader Zacks Security industry.
Zscaler Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The discount is even more noticeable compared with major cybersecurity peers like Fortinet, Palo Alto Networks and CrowdStrike. Fortinet trades at 13.19 times forward 12-month sales, Palo Alto Networks at 19.16 times and CrowdStrike at 31.63 times.
At first glance, this valuation gap looks like a bargain for a high-quality cybersecurity stock.
However, a low valuation does not automatically make a stock attractive. Investors often pay higher multiples for companies that can deliver stronger and more consistent growth. But Zscaler's growth continues to slow, which justifies its low valuation.
In other words, ZS stock is cheap because investors are already pricing in a weaker growth outlook.
Final Thoughts: Exit ZS Stock for NowZscaler remains a major cybersecurity company with significant long-term opportunities, particularly as AI and cloud adoption create new security challenges. However, the stock's current investment case is difficult to defend.
The company is facing slowing revenue and ARR growth, rising capital spending and weaker free-cash-flow margins. At the same time, Palo Alto Networks, CrowdStrike and Fortinet are delivering much stronger stock returns.
Zscaler’s discounted valuation is attractive on the surface, but it is not enough to offset the deterioration in growth. It is wise to exit Zscaler stock for now and wait for clearer evidence that growth is stabilizing.
Zscaler currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A security partnership with OpenAI sent Cloudflare shares surging while cybersecurity giants CrowdStrike and Palo Alto sat out the rally entirely, raising a pointed question about which AI security narrative investors actually believe.
Shares of Cloudflare (NYSE:NET | NET Price Prediction) are ripping higher in Wednesday morning trading on a security tie-in with privately held OpenAI that investors are treating as a marquee validation of the company’s agentic-AI positioning. Cloudflare stock is up 9% to $308.52, extending the year-to-date gain to 56%. The size of the move relative to NET stock’s peers makes this a single-name repricing rather than a broad cybersecurity bid.
Zscaler (NASDAQ:ZS) is participating on a smaller scale, likely on the read-across from its own established OpenAI relationship through the DayBreak project and prior work with Anthropic. Zscaler stock is up 3% to $166.48, adding a bid to a name that had been under pressure heading into today.
Cloudflare’s Q2 FY2026 report already flagged the theme, with revenue of $696.1 million, up 36% year over year, and non-GAAP EPS of $0.29 against the $0.27 consensus. CEO Matthew Prince framed the company as sitting at the center of a “fundamental rewrite of the Internet for machine-to-machine traffic,” and the OpenAI service gives that pitch a concrete artifact investors can point to.
OpenAI Daybreak Partnership Fuels the Bid On September 3, Cloudflare announced a context-aware vulnerability discovery and remediation service delivered through Cloudflare Managed Defense and built on OpenAI’s Daybreak cyber models. The service identifies high-risk software vulnerabilities, blocks attacks at the network edge, and generates code patches, though no financial terms accompany the partnership.
The announcement lands several sessions before today’s move, so this reads as investor conviction building around an existing launch rather than breaking news. Momentum and late recognition are doing part of the work, and Prince stated on the Q2 FY2026 call that “the number one thing that’s causing our phone to ring from big companies is them saying, listen, we know we have to do AI, but we need to do it more securely,” a positioning the OpenAI service now anchors with a shippable product.
Sector Peers Sit Out the Rally The gap between Cloudflare and the rest of the group is the real story. CrowdStrike (NASDAQ:CRWD) stock is down 0.5% to $209.04, while Palo Alto Networks (NASDAQ:PANW) stock is down 0.85% to $334.13. Both companies have well-developed AI-security stories of their own that aren’t catching today’s bid.
For sector framing, the First Trust NASDAQ Cybersecurity ETF (NASDAQ:CIBR) is up 0.4% to $94.41, a muted gain that underscores how concentrated today’s flow is in Cloudflare. Furthermore, the Invesco QQQ Trust (NASDAQ:QQQ) is down 0.54% to $714.46. The CIBR ETF holds all four of today’s featured stocks, with Palo Alto and CrowdStrike as its heaviest cybersecurity weights and Cloudflare and Zscaler as smaller positions.
On the CrowdStrike Q2 FY2027 call, CEO George Kurtz stated that AIDR “can be bigger than the EDR business” given the volume of AI agents each employee will run, and net new ARR of $332.8 million grew 51% year over year. Palo Alto CEO Nikesh Arora called AI “a long-term tailwind for cybersecurity” on the Q4 FY2026 call after adding nearly $1 billion in net new next-generation security ARR in a single quarter. The absence of a sympathy move in either name reinforces the read that investors are paying for Cloudflare’s specific OpenAI positioning rather than a sector re-rate.
What to Watch Insider filings show recent share disposals from Cloudflare President and Co-Chair Michelle Zatlyn, CEO Matthew Prince, and CFO Thomas Seifert dated August 15, with additional Zatlyn dispositions running through August 21. The recurring monthly cadence points to scheduled trading plans rather than reactive selling, worth naming since a headline about a large insider sale can otherwise land the wrong way.
Investors can watch for whether Cloudflare stock holds above $300 as the session progresses, and whether the OpenAI narrative eventually pulls in secondary names beyond Zscaler. The company’s next scheduled data point is Q3 2026 results, with prior guidance calling for revenue of $736 million to $737 million and diluted net income per share of $0.34. Position sizing on one’s NET stock exposure here should reflect that today’s move is momentum-led rather than tied to newly disclosed financial terms.
Contact [email protected] for any questions or corrections.
Zscaler (ZS - Free Report) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.
Over the past month, shares of this cloud-based information security provider have returned -3.9%, compared to the Zacks S&P 500 composite's -0.4% change. During this period, the Zacks Security industry, which Zscaler falls in, has lost 3.4%. The key question now is: What could be the stock's future direction?
Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.
Revisions to Earnings EstimatesHere at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.
We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For the current quarter, Zscaler is expected to post earnings of $1.06 per share, indicating a change of +10.4% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The consensus earnings estimate of $4.51 for the current fiscal year indicates a year-over-year change of +7.1%. This estimate has changed +0.6% over the last 30 days.
For the next fiscal year, the consensus earnings estimate of $5.25 indicates a change of +16.4% from what Zscaler is expected to report a year ago. Over the past month, the estimate has changed -1.1%.
Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Zscaler is rated Zacks Rank #5 (Strong Sell).
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS
Projected Revenue GrowthEven though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.
In the case of Zscaler, the consensus sales estimate of $937.04 million for the current quarter points to a year-over-year change of +18.9%. The $3.92 billion and $4.54 billion estimates for the current and next fiscal years indicate changes of +17% and +15.7%, respectively.
Last Reported Results and Surprise HistoryZscaler reported revenues of $898.18 million in the last reported quarter, representing a year-over-year change of +24.9%. EPS of $1.19 for the same period compares with $0.89 a year ago.
Compared to the Zacks Consensus Estimate of $877.14 million, the reported revenues represent a surprise of +2.4%. The EPS surprise was +9.17%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates each time over this period.
ValuationNo investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.
While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.
As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Zscaler is graded F on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
ConclusionThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Zscaler. However, its Zacks Rank #5 does suggest that it may underperform the broader market in the near term.
Key Takeaways Z-Flex generated over $770 million in fourth-quarter TCV, up more than 60% sequentially for Zscaler.Z-Flex customers posted nearly 30% average ARR uplift in fiscal 2026 as flexible deals eased expansion.Zscaler expects fiscal 2027 revenue growth of 16.6%-17.5% after fourth-quarter revenues rose 24.9%. Zscaler, Inc.’s (ZS - Free Report) Z-Flex offering is emerging as an important growth lever, helping the cybersecurity company deepen customer relationships while making it easier for enterprises to expand across its platform. The momentum was particularly strong in the fourth quarter of fiscal 2026.
In the fourth quarter, Z-Flex generated more than $770 million in total contract value (TCV), up more than 60% sequentially. For the full fiscal 2026, TCV exceeded $1.7 billion. Z-Flex offering gives customers multi-year commitments while allowing them to activate or swap modules without starting a new procurement process. This flexibility can shorten sales cycles and create more opportunities for upselling.
The results suggest that customers are responding well. Z-Flex customers recorded an average ARR (annual recurring revenues) uplift of nearly 30% in fiscal 2026. Zscaler’s fourth-quarter revenues increased 24.9% year over year to $898.2 million, while ARR rose 25% to $3.77 billion. Non-seat-based metered solutions, which include offerings beyond traditional user-based security, accounted for about 30% of new and upsell ACV in the fourth quarter and full-fiscal 2026, with related ARR growing more than 100%.
The key question is whether Z-Flex can keep driving adoption as Zscaler enters a slower-growth fiscal 2027. The company expects full-year revenue growth of 16.6%-17.5%. Still, rising platform adoption, larger customer deals and strong Z-Flex momentum provide reasons for optimism. If Zscaler can use flexible contracts to expand customer spending, Z-Flex could become an important support for growth while improving long-term revenue visibility.
PANW and CRWD: ZS’ Rivals Focus on Flexible PlatformsZscaler is not alone in using security platforms to expand customer spending. The company’s major competitors, Palo Alto Networks, Inc. (PANW - Free Report) and CrowdStrike Holdings, Inc. (CRWD - Free Report) , are also focusing on platform strategies to boost customer adoption.
Palo Alto Networks’ platformization strategy is translating into larger commitments, supported by expanding next-generation security ARR and RPO. PANW’s security platforms simplify security infrastructure for organizations by eliminating the need for multiple, stand-alone security appliances and software products.
This reduces the total cost of ownership, giving Palo Alto Networks a competitive edge and boosting customer adoption. In the third quarter of fiscal 2026, next-generation security ARR rose 60% year over year to $8.13 billion, and total RPO increased 36% to $18.4 billion, showing larger commitments across the platform.
Similar to Zscaler, CrowdStrike is also focusing on a flexible platform, Falcon Flex. By letting customers commit upfront and draw down spending across products over time, Falcon Flex is becoming a larger driver of platform consolidation.
In the second quarter of fiscal 2027, CrowdStrike added more than 935 Flex accounts, more than the prior three quarters combined, and Flex ending ARR exceeded $2.29 billion, up 101% year over year. Customers converting from standard subscriptions to Flex generated more than 40% average ending ARR uplift.
For Zscaler, the challenge is to make Z-Flex’s flexibility a clear advantage as rivals use platform-based models to drive adoption and larger customer commitments.
Zscaler’s Price Performance, Valuation & EstimatesZS shares have plunged 24.9% year to date, while the Zacks Security industry has surged 71.6%.
Zscaler YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, ZS trades at a forward price-to-sales ratio of 6.96, significantly below the industry’s average of 17.11.
Zscaler Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Zscaler’s fiscal 2027 and 2028 earnings implies a year-over-year increase of 7.1% and 16.4%, respectively. Estimates for fiscal 2027 have been revised downward over the past 60 days, while fiscal 2028 estimates have been lowered in the past 30 days.
Image Source: Zacks Investment Research
Zscaler currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
SAN JOSE, Calif., Sept. 09, 2026 (GLOBE NEWSWIRE) -- Zscaler, Inc. (NASDAQ: ZS), the cybersecurity platform for the AI era, today announced Zscaler Agentic SOC, a new approach to security operations built to proactively reduce exposures, scale human expertise and stop AI-driven attacks at machine speed. In today’s threat landscape, simply layering in AI capabilities onto the existing security stack will not provide the protection needed. Zscaler is delivering a new solution to the security operations center (SOC), purpose-built from the ground up with an AI-first approach to detect, investigate, and stop threats at machine speed.
Today’s threat landscape is defined by speed and stealth as AI-driven attacks move faster than SOC teams can manually correlate, analyze, and remediate. Threatlabz, Zscaler’s global research team, is also seeing a rise in evasive tactics, including the use of trusted sites to host attacks, abuse of legitimate remote management tools, and browser-based attacks. Zscaler Agentic SOC is built to meet that challenge by combining unique Zscaler telemetry, the world’s largest decoy mesh network, expert-validated agents, integrated Zscaler Zero Trust controls, and customers’ third-party controls to detect threats earlier and automate containment at machine speed.
To power Agentic SOC, Zscaler has partnered with leading frontier AI labs, including Anthropic and OpenAI. By integrating their frontier models alongside Zscaler's proprietary threat intelligence and zero trust telemetry, Zscaler is able to deliver AI agents that reason with greater depth, accuracy, and explainability than any single model or approach could achieve alone. This extends beyond threat detection, with Zscaler's open platform approach enabling direct integration with frontier models, allowing security teams to ingest vulnerability findings and operationalize them within their SOC workflows. This collaboration reflects Zscaler's commitment to building on the best available AI that includes speed, reliability and transparency that security operations demand.
“AI-driven attacks are moving faster than traditional SOC models were ever designed to handle,” said Deepen Desai, Executive Vice President of Cybersecurity at Zscaler. “Agentic SOC is a fundamental rethinking of security operations, built with agentic capabilities at its core to reduce exposures proactively, extend human expertise with AI agents and contain threats at machine speed. With unmatched inline telemetry, specialized AI agents and closed-loop remediation, Zscaler is giving security teams the visibility and control they need to outpace modern attackers.”
“The past year has made one thing clear: AI attacks are fundamentally changing the threat landscape, operating at a speed, scale, and level of adaptability that looks very different from traditional human-led activity,” said Allie Mellen, principal analyst and author of Code War: How Nations Hack, Spy, and Shape the Digital Battlefield. “To defend effectively, organizations must double down on the fundamentals — Zero Trust principles, preventing data exfiltration, limiting access, and making AI attacks as expensive as possible.”
Reimagining SecOps: The Zscaler Differentiation
Unified exposure and threat management: Zscaler connects proactive attack surface reduction with reactive threat defense in a single platform, enriching context and accelerating protection.Unmatched zero trust telemetry: Zscaler sits inline, capturing network, identity, endpoint, cloud and AI insights across its 750 billion daily zero trust transactions that security teams can operationalize for real-time detection and response.Specialized AI agents built on frontline experience: Zscaler AI agents have been trained and continuously tuned on more than 10 years of frontline SOC, managed detection and response and threat-hunting experience, informed by threat intelligence derived from thousands of customer environments globally.Closed-loop inline remediation: Zscaler automatically contains threats at machine speed with native inline controls that can isolate compromised users, block command-and-control communications, and cut off lateral movement. Integrations with customers’ third-party tooling provide increased options for nuanced responses to active threats. “Our team was drowning in alert noise, forcing top analysts into triage instead of proactive threat hunting,” said Andrea Liccardi, Sr. Cybersecurity Manager, Maire Tecnimont. “Zscaler Agentic SOC gives us full attack-path context using telemetry we already had in place, helping our team move from fragmented signals to faster, more informed decisions. Zscaler has proven to be one of our most valuable cybersecurity partners, continuously helping us improve operational efficiency, visibility, and our ability to focus our analysts on what really matters.”
Open Platform Integration
Zscaler Agentic SOC seamlessly integrates with your existing security ecosystem, pulling in third-party data to contextualize risks and threats. By triggering automated outbound actions, it proactively eliminates exposures and contains attacks at machine speed.
Key Features of Zscaler Agentic SOC
Data-rich context graph: Correlates real-time zero trust telemetry with third-party data to map, prioritize and investigate complex incident chains.Specialized AI agents: Autonomous agents perform dedicated roles across triage, root-cause investigation, assigning verdicts, and triggering response workflows, reducing analyst workload and accelerating defenses.Advanced detections informed by threat intelligence: Applies frontline threat research and rich telemetry to identify sophisticated attacks earlier and with greater precision.Continuous threat hunting and expert support: Combines AI speed with seasoned human judgment from Zscaler and Red Canary security experts. Availability and Additional Information
Zscaler Agentic SOC is available globally today. To learn more, register for the global launch webinar or visit zscaler.com/solutions/agentic-secops.
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Forward-Looking Statements
This press release contains forward-looking statements that are based on our management's beliefs and assumptions and on information currently available to our management. These forward-looking statements include the expected adoption, performance and benefits of Zscaler Agentic SOC, including its AI agents, third-party integrations and automated threat-containment and remediation capabilities. These forward-looking statements are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. A significant number of factors could cause actual results to differ materially from statements made in this press release, including those factors related to Zscaler’s ability to deliver and achieve customer adoption of Zscaler Agentic SOC and the performance and effectiveness of its AI-driven and automated capabilities. Additional risks and uncertainties are set forth in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on September 3, 2026, which is available on our website at ir.zscaler.com and on the SEC's website at www.sec.gov. Any forward-looking statements in this release are based on the limited information currently available to Zscaler as of the date hereof, which is subject to change, and Zscaler will not necessarily update the information, even if new information becomes available in the future.
About Zscaler
Zscaler (NASDAQ: ZS) accelerates digital transformation so customers can be more agile, efficient, resilient, and secure. The Zscaler Zero Trust Exchange™ platform protects thousands of customers from cyberattacks and data loss by securely connecting users, devices, and applications in any location. Distributed across over 200 public data centers globally and thousands of private sites at the edge, the SASE-based Zero Trust Exchange is the world’s largest in-line cloud security platform.
Media Contact
Nick Gonzalez, Director, Public Relations, [email protected]
Zscaler has declined 39% since my previous coverage, underperforming the benchmark's 19% gain. Despite the price collapse and volatility, I see no structural deterioration in ZS's business fundamentals. ZS now trades at approximately 35x forward P/E, which I consider fairly valued given strengthened fundamentals.
Zscaler (NASDAQ:ZS) reported fourth-quarter fiscal 2026 revenue of $898 million, up 25% from a year earlier and 6% sequentially, as the cybersecurity company cited continued demand for its zero-trust platform, data security offerings and AI-related products.
Non-GAAP operating income rose 37% year over year to $218 million, while non-GAAP operating margin reached a record 24.3%, up 220 basis points. For the full fiscal year, revenue increased 25% to $3.4 billion, and the company generated $779 million in free cash flow, representing a 23% free-cash-flow margin.
“We delivered a strong finish to the fiscal year with 25% ARR growth and a non-GAAP operating margin of 24%,” Chairman and CEO Jay Chaudhry said on the company’s earnings call. ARR Growth and Enterprise Deal Activity Total annual recurring revenue, or ARR, reached $3.8 billion at the end of the quarter, up 25% year over year. Total net new ARR was $246 million, an increase of 24%. Excluding the contribution from Red Canary, which Zscaler acquired during fiscal 2026, net new ARR was $232 million and grew 17% year over year.
CFO Kevin Rubin said the company’s net new ARR growth, excluding Red Canary, accelerated from 7% in fiscal 2025 to 10% in the first half of fiscal 2026 and 17% in the fourth quarter. Red Canary exited the quarter with $141 million in ARR.
Zscaler also reported record activity for new annual contract value deals above $1 million. The number of customers producing more than $10 million in ARR nearly doubled year over year, Rubin said. The company ended the quarter with:
785 customers generating more than $1 million in ARR, up 18% year over year. 4,182 customers generating more than $100,000 in ARR, up 20% year over year. More than 950 “Zero Trust Everywhere” enterprise customers, compared with more than 700 in the prior quarter and more than 350 at the end of fiscal 2025. Remaining performance obligations totaled about $7.4 billion, up approximately 27%, with roughly 45% classified as current RPO.
AI Security and Platform Expansion Management positioned AI security as a growing source of demand for the company’s platform. Chaudhry said organizations are seeking to protect AI models, agents, applications and data as more autonomous AI systems are deployed.
The company said Security for AI bookings increased more than 50% sequentially in the fourth quarter, following what it described as a strong third quarter. In addition, Rubin said the Security for AI pipeline rose 75% sequentially.
Chaudhry said Zscaler’s AI security products are intended to help customers discover AI assets, govern access to data and applications, inspect prompts and responses for security risks, and secure communications between agents. He added that 70% of Security for AI deals in the quarter also included the company’s data security solution.
Zscaler introduced two products at its ZenithLive conference in June: Zero Trust Exchange for Agents and Endpoint AI Security. Both products are in early access, and management expects them to scale in the second half of fiscal 2027.
The company also plans to launch an Agentic SecOps offering through a webcast on Sept. 9. Chaudhry said the solution combines Zscaler’s telemetry with Red Canary’s managed detection and response expertise to help security teams detect, investigate and respond to threats using specialized AI agents. He said the product is expected to begin contributing in the second half of fiscal 2027 and more meaningfully in fiscal 2028.
Z-Flex, Non-Seat Products and Sales Strategy Zscaler said its Z-Flex commercial model generated more than $770 million in total contract value during the fourth quarter, up more than 60% sequentially. For fiscal 2026, Z-Flex produced more than $1.7 billion in total contract value, while customers using the model recorded an average ARR uplift of nearly 30%.
The model allows customers making multiyear commitments to activate or swap product modules without beginning a new procurement cycle. Management said it has supported upsells, shorter sales cycles and greater visibility into customer commitments.
Non-seat-based metered products accounted for approximately 30% of new and upsell annual contract value in the quarter and for the full year. ARR from those offerings grew more than 100% year over year. These products include offerings tied to cloud workloads, branches, data volumes and AI-related consumption.
The company said it is adding new sales resources, including dedicated representatives focused on enterprise new-logo opportunities, while also expanding channel activity. Zscaler recently broadened its partnership with Carahsoft to pursue commercial and small- and medium-sized business customers in the U.S. through a fully channel-led model.
At the same time, Zscaler is undertaking a workforce restructuring affecting about 3% of employees. The action is expected to result in restructuring charges of approximately $30 million to $33 million. Rubin said the company is reallocating resources to provide capacity for AI and growth initiatives.
Fiscal 2027 Outlook For the first quarter of fiscal 2027, Zscaler forecast revenue of $935 million to $939 million, representing approximately 19% year-over-year growth. The company expects non-GAAP operating profit of $215 million to $217 million, or an operating margin of about 23%, and non-GAAP earnings per share of $1.15 to $1.16.
For the full fiscal year, Zscaler projected ARR of $4.396 billion to $4.426 billion, growth of approximately 16.6% to 17.4%. Revenue is expected to be $3.908 billion to $3.938 billion, representing growth of 16.6% to 17.5%.
The company forecast full-year non-GAAP operating profit of $924 million to $932 million and an operating margin of approximately 23.7%. It expects free-cash-flow margin of roughly 23% to 23.5%, while capital expenditures are projected to remain elevated amid higher pricing for memory, storage and processor components.
About Zscaler (NASDAQ:ZS) Zscaler is a cloud security company that delivers a cloud-native platform to protect users, applications and data as organizations move away from traditional, network-centric security architectures. The company focuses on a zero trust approach that assumes no implicit trust for users or devices, providing secure access to the internet, SaaS applications and private applications regardless of where users are located. Zscaler positions its services as an alternative to legacy appliances and site-centric VPNs, aiming to simplify security while enabling modern, distributed workforces.
Key offerings are built around the Zscaler Zero Trust Exchange, a multi-tenant cloud platform that enforces security and access policies in-line.
Zscaler NASDAQ: ZS gave the market everything it could ask for in its fiscal fourth-quarter 2026 earnings report: outperformance, acceleration, wider margins, and strong guidance. The one thing it didn’t give was firm reassurance that the sales leadership transition was going smoothly. Execs noted the transition would play out in the first half of the year, but offered little color beyond that. The critical takeaway is that this is the catalyst for higher share prices, and news could come at any time.
Zscaler is not advancing as strongly as other cybersecurity stocks because of lost sales execs. While one was replaced early in the quarter, the loss led to cautious guidance, cautious analysts, and tepid stock price action. The upshot is that Zscaler, as the sector laggard with a catalyst ahead, is well positioned to advance aggressively once the headwind is removed. Until then, investors can focus on the results and price action, which underpin and reflect a market reversal.
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Zscaler Bottoms, on Cusp of Major Price InflectionZscaler’s chart price action is bullish, reflecting a Double-Bottom reversal pattern. The only bad news is that the pattern has yet to be confirmed, but that is likely over the coming months. Signs of strength include the action itself, high volume on buying days, and strengthening MACD, which points to improving momentum—each upswing is a little stronger than the last and likely to strengthen again, given the strength of results and guidance. Critical target levels are near $158 and $195, with the $158 support target potentially tested before a fresh high is set. Technical triggers include confirmed support at the low end of the range and/or a clear break to fresh highs.
Q4 results indicate the reversal will progress and new highs will be set. Revenue grew by 24.9%, accelerating year-over-year (YOY) to $898.19 million to outpace consensus by over 230 basis points. Strength came from new clients, penetration, and AI demand, with Security for AI Solutions growing 50% sequentially. Annual recurring revenue, an indicator of future revenue, also grew 25% both quarter over quarter and year over year, pointing to sustained strength in the coming quarters.
Margin news aligns with the bullish outlook, with GAAP and non-GAAP margins improving at the gross and operating levels. Key details include narrowing losses and improving adjusted profitability, with non-GAAP operating margin up 220 basis points (bps) to 24.3%. Adjusted earnings per share (EPS) were also solid, up by 34% and 10 cents better than expected. The only negative is a rising share count, but the increase is marginal, linked to share-based compensation, and insufficient to offset the equity gains.
The balance sheet reflects the impact of capital expenditures (CapEx), with cash down YOY, but that is the worst of the news. The cash depletion is offset by increased inventory and receivables; current and total assets are up, and liabilities increase. The net impact was a 44% increase in shareholder equity and the expectation of ample future cash flow to sustain future improvement.
Analysts Respond With Optimism: Forecast Complete Reversal in Price ActionZscaler Stock Forecast Today12-Month Stock Price Forecast:
$215.90
27.15% Upside
Moderate Buy
Based on 42 Analyst Ratings
Current Price$169.80High Forecast$390.00Average Forecast$215.90Low Forecast$150.00Zscaler Stock Forecast Details
Analysts expressed some skepticism about the sales team transition but were otherwise pleased with the results. Several analysts raised price targets immediately after the report, reinforcing the consensus target, which implies upside from recent levels. The fresh high is key because it puts the market above the critical resistance target and into a full technical reversal. In this scenario, ZS shares could move toward the high end of the range, pegged at $390.
Institutional activity suggests downside is limited, as they own about 46% of the stock and have been accumulating. More importantly, MarketBeat data indicates accelerated activity ahead of the release, underpinning late-summer support. The group is likely to remain active on dips, with the critical support target likely to trigger activity.
Zscaler’s biggest risk after the report is deceleration. While the latest results reflected acceleration, the guidance forecasts deceleration, which presents a headwind for sentiment. The caveat is that the quarter was strong and guidance came in well above forecasts. The likely outcome is that Zscaler has room to outperform its own guidance, potentially by a wide margin, as its zero-trust tools are in high demand, keeping analysts bullish and lifting estimates to align with reality. Agentic AI is the cybersecurity driver, and we’re in the very earliest phases of agentic rollout. Investors can expect agentic traffic and security needs to grow significantly over the next few years.
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Zscaler (ZS) is experiencing a notable decline in its stock price, despite reporting a strong fiscal Q4 performance and providing optimistic near-term revenue g
CNBC's Jon Fortt and Jay Chaudhry, Zscaler CEO, join 'Squawk on the Street' to discuss reporting an earnings beat, the Nvidia-Hugging Face deal, and more.
Zscaler posted a clean earnings beat and still sent the whole cybersecurity sector into retreat, raising an uncomfortable question about whether even the strongest growth numbers can justify where these stocks are priced right now.
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Cybersecurity software is under pressure again Friday morning after Zscaler (NASDAQ:ZS | ZS Price Prediction) issued fiscal 2027 growth guidance that overshadowed a clean fourth-quarter beat, and peers are drifting with it. The move sits against a broader tape that’s only modestly softer, so the group weakness stands out.
The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is down 0.5% to $769.39, giving back a small piece of a hot summer run. The Invesco QQQ Trust (NASDAQ:QQQ) is essentially flat at $717.38, with large-cap tech holding its ground even as software wobbles.
Zscaler stock is down 4% to $170.25 and was down 21% year to date (YTD) through Thursday’s close, the sharpest post-earnings move in the group and a clear signal that fiscal 2027 guidance is what set the tone. Meanwhile, Palo Alto (NASDAQ:PANW) shares are unchanged at $331.96, perhaps still digesting a similar guidance-day reaction from earlier in the week. CrowdStrike (NASDAQ:CRWD) stock is down 1% to $212.99, seemingly slipping in sympathy on a day the company itself has no catalyst.
Guidance Steals the Show Zscaler reported fiscal fourth-quarter revenue of $898.2 million, up 25% year over year (YoY), alongside adjusted earnings of $1.19 per share that topped consensus. CEO Jay Chaudhry credited adoption of the company’s Zero Trust architecture and pointed to agentic AI as a durable driver. Annual recurring revenue reached $3.77 billion, up 25%, with organic ARR growing 20% once the Red Canary contribution is stripped out, according to Zscaler.
For fiscal 2027, Zscaler guided revenue and annual recurring revenue growth to a range of 16.6% to 17.5%, well below the 25% pace Zscaler just delivered in fiscal 2026. The company also announced a restructuring expected to reduce its global workforce by 3%, a cost signal that lines up with a slower growth rate. Management framed the deceleration as the effect of lapping Red Canary’s contribution, though investors aren’t waiting for that reconciliation to travel through the model.
Palo Alto and CrowdStrike Fit the Same Pattern Palo Alto reported strong fiscal fourth-quarter results on September 1, with revenue up 34.5% YoY to $3.41 billion and next-generation security ARR growing 63% to $9.10 billion, according to Zscaler. In the following session, Palo Alto stock still slipped, echoing a familiar setup where a valuation-heavy leader beats and gives back ground anyway. Its fiscal 2027 revenue guide of $14.10 billion to $14.20 billion implies 23% to 24% growth, a step down from fiscal 2026, and Palo Alto stock was up 80% YTD through Thursday’s close, even after this week’s slide.
CrowdStrike delivered its own strong quarter on August 26, with Q2 FY2027 net new ARR of $332.8 million growing 51% YoY and management raising the full-year revenue guide to $5.99 billion to $6.01 billion, according to Zscaler. The shares are easing today without a fresh CrowdStrike catalyst, which reads as sector sentiment traveling through the group after Zscaler’s outlook shock. CrowdStrike stock was up 81% YTD through Thursday’s close, so the three-name pattern points to a market repricing growth durability across cybersecurity leaders, with the two names that entered the session at rich multiples leaking less than the one whose multiple already reflected weaker growth.
What to Watch Next Zscaler’s Investor Day in New York on October 6, together with a September 9 launch webcast for the company’s agentic SecOps solution, gives management two near-term chances to reframe the growth conversation with fresh product detail. The Q1 fiscal 2027 revenue guide of $935 million to $939 million already implies 19% YoY growth, above the full-year midpoint and suggesting the deceleration back-loads later in the year as Red Canary comps normalize, according to Zscaler.
Investors can watch for whether Zscaler’s product cadence, its Security for AI ramp, and Z-Flex momentum stabilize the growth narrative before Q2 fiscal 2027 guidance lands. Anyone weighing cybersecurity-sector exposure here should size their positions to survive multi-quarter guidance resets, since valuation compression across the group can outlast any single earnings reaction.
Contact [email protected] for any questions or corrections.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of ZS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Shares of Zscaler Inc (NASDAQ:ZS) are down on Friday, after the company reported its fourth-quarter results.
• Zscaler stock is taking a hit today. Why is ZS stock falling?
Here are some key analyst takeaways:
Stephens analyst Todd Weller maintained an Overweight rating, while raising the price target from $200 to $225.Needham analyst Mike Cikos reiterated a Buy rating, while lifting the price target from $180 to $215.Scotiabank analyst Patrick Colville reaffirmed a Sector Outperform rating and price target of $200.Canaccord Genuity analyst Kingsley Crane maintained a Buy rating and price target of $210.Guggenheim Securities analyst John DiFucci reiterated a Buy rating and price target of $214.Cantor Fitzgerald analyst Jonathan Ruykhaver reaffirmed an Overweight rating and price target of $225.Rosenblatt Securities analyst Catharine Trebnick maintained a Buy rating and price target of $200.BTIG analyst Gray Powell reiterated a Neutral rating on the stock.Check out other analyst stock ratings.
Stephens: Zscaler exited fiscal 2026 with strong fourth-quarter results, Weller said in a note. The quarter was "clean and relatively uneventful compared to the last few quarters," he wrote.
Organic NNARR (net new annual recurring revenue) growth of 17% was an acceleration and came ahead of expectations, the analyst stated.
"Trends across key growth drivers (ZTE, Data Security, improving sales productivity, Z-Flex) were positive and the company’s newer Security for AI solutions are experiencing positive early traction," he further wrote.
Needham: Zscaler’s fourth-quarter ARR grew 25% year-on-year to $3.771 billion, topping consensus estimate of $3.745 billion by $26 million, Cikos said. Management raised ARR growth guidance to 17% from their prior outlook of 16%-17%, he added.
Zscaler has a larger Renewal volume in the first half of fiscal 2027 than the prior-year period, the analyst stated. "After acquiring Red Canary in August 2025, Zscaler is finally launching the integrated Agentic SOC offering next week," he further wrote.
Scotiabank: Zscaler’s new ARR, excluding Red Canary, accelerated to 17% year-on-year, Colville said. Management lifted their fiscal 2027 ARR guidance, which reflects adjusted net new ARR growth of 4% in the year, he added.
Assuming "a typical beat," this updated guidance implies new ARR growth of 10%-18% in fiscal 2027, the analyst stated.
"We continue to view Zscaler as an advanced AI beneficiary as Mythos-related readiness drives cybersecurity spend, including multiple CISOs investing real-time in Zero Trust Network Access," he further wrote.
Canaccord Genuity: Zscaler reported solid results, after guidance just a quarter ago was cut due to two sales leadership departures, Crane said. The company’s organic net new ARR growth accelerated from 7% in fiscal 2025 to 10% in the first half of 2026 and to 17% in the fourth quarter, he added.
"Steady retention plus accelerating net new signals to us that the inflection is skewed toward new business, which is more encouraging," the analyst wrote. The business model that is evolving is being decoupled from seat counts, which "could be a more durable story," he further stated.
Guggenheim Securities: After providing disappointing guidance in the previous quarter, Zscaler reported strong fourth-quarter results and guided both first quarter and fiscal 2027 above Street expectations, DiFucci said. Total ARR of $3.771 billion represents 25% year-on-year growth, he added.
New ARR, adjusted for churn and inorganic contribution, is estimated to have grown 19% year-on-year, "implying business momentum," the analyst wrote. He also estimates adjusted new ARR to have grown by 17% in fiscal 2025, after declining 4% in fiscal 2025.
Cantor Fitzgerald: Zscaler’s revenue grew 25% year-on-year in the fourth quarter, "reflecting strong customer demand for the Zero Trust Exchange platform," Ruykhaver said. The company exited fiscal 2026 with ARR of $3.8 billion, up 20% organically, excluding Red Canary, he added.
The new offering that combines Red Canary’s detection technology with Zscaler’s telemetry covers more than 750 billion daily transactions to support detection, investigation, and remediation, the analyst stated. Management expects the first half of fiscal 2027 "to be a ramp period, with the offering beginning to contribute to growth in 2H27 and more meaningfully in FY28," he further wrote.
Rosenblatt Securities: Zscaler reported a beat on "every guided metric," Trebnick said. The company reported non-GAAP earnings of $1.19 per share, with non-GAAP operating margin hitting a record high of 24.3%, she added.
Americas drove the outperformance, growing around 30% year-on-year in the fourth quarter and about 31% in the full year, the analyst stated. She noted, however, that the fiscal 2027 ARR guidance implies net new ARR of $625-$655 million, versus $615 million ex-Red Canary in fiscal 2026, which is "roughly 4% organic growth versus the 17% Q4 exit rate."
BTIG: Zscaler’s reported ARR implies that the company added $232 million in organic net new ARR in the quarter, an increase of 17% year-on-year, Powell said.
While management raised their total ARR outlook, "investors appear concerned that guidance implies $640MM net adds, which is up only 4% from last year," the analyst wrote. Excluding Red Canary, Zscaler exceeded guidance in fiscal 2026 by $38 million and a similar upside in fiscal 2027 puts NNARR growth at over 10%, he added.
ZS Price Action: Shares of Zscaler had declined by 5.44% to $168.42 at the time of publication on Friday.
SummaryZscaler is rated a buy due to its leading zero-trust cybersecurity solutions, which are well-positioned to counter escalating AI-driven threats.Despite recent stock underperformance and slowing growth (~25% YoY), I expect ZS to benefit from a surge in cybersecurity spending as AI risks intensify.ZS’s recent earnings beat expectations, and while forward guidance is conservative (16.6%-17.5% growth), I believe results will surpass these targets.I remain cautious on human-centric, service-focused firms like NCC Group, as AI may erode their business models and reduce billable hours. Getty Images
Thesis I believe we will see a serious ramp-up in cybersecurity spending in the coming months owing to AI threats, providing tailwinds for cybersecurity companies. That said, in the long run, AI will create both cybersecurity winners and losers, and for now, I am shying away
1.41K Followers
Analyst’s Disclosure: I/we have a beneficial long position in the shares of ZS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Zscaler posted a tenth consecutive earnings beat and sent shares surging, but the real question buried inside the report is whether the AI security boom reflects new enterprise budget dollars or just rebranded spending that was already locked in.
Every software company now claims to be an AI company, and the reader deserves to know whether Zscaler (NASDAQ:ZS | ZS Price Prediction) delivered a quarter that would look strong even without the label attached.
On September 3, 2026, the cloud security company reported Q4 FY26 revenue of $898.18M, up 24.9% year over year, and non-GAAP EPS of $1.19, versus an estimated $1.09, according to CNBC. CNBC reported that shares jumped double digits on the release.
CEO Jay Chaudhry framed the story around AI, saying the company is “uniquely equipped to help companies both combat the threats created by AI”. The interesting work is separating durable enterprise demand from a narrative that has attached itself to almost every security vendor this year.
Beat, Raise, and Why the Raise Matters More A beat describes a quarter that already happened. A raise puts management’s credibility behind a forecast it has to hit, which is why the guidance line is where I look first.
Zscaler guided Q1 FY27 revenue to $935 million-$939 million and full-year FY27 revenue to $3.908 billion-$3.938 billion. CNBC’s Seema Mody noted the guidance came in above what the street was predicting for the first quarter and the full year.
The tenth consecutive EPS beat is a real streak, although the surprise is smaller at 9.17% than the 12.56% posted in Q2 26.
The details sit in the 8-K exhibit filed with the SEC. GAAP results remain negative, with GAAP operating income of -$15.5 million, so any bull case rides on non-GAAP profitability continuing to scale.
Full-year FY26 revenue reached $3.35 billion, up 25.4%, which is the number most investors will anchor on when they judge whether next year’s guide feels conservative or aspirational.
ARR Is the Number That Decides the Multiple Annual recurring revenue is the annualized value of active subscription contracts. In a subscription business, ARR growth is a better read on customer demand than any single quarter’s revenue line because it strips out billing timing.
Total ARR reached $3.77 billion, up 25% year over year, with organic ARR at $3.63 billion, up 20%. Red Canary contributed $141 million of that ARR.
Net new ARR in the quarter was $246 million, a step up from the $166 million booked in Q3. That reacceleration is the strongest single data point in the release.
FY27 ARR guidance of $4.396-$4.426 billion implies growth of 16.6% to 17.4%, a clear deceleration from FY26. Management ties much of that step-down to lapping Red Canary rather than a demand softening.
Investors should watch whether organic ARR growth holds near 20%. If it slips into the mid-teens while the AI narrative gets louder, the story frays.
Margins Held, Which Makes the Growth More Believable Non-GAAP operating margin was a record 24%, up from 22% a year ago. Growth arrived without heavy discounting or a spending surge, which matters more than the top-line beat.
Free cash flow tells a messier story. It came in at $60.8 million as capex jumped 177.7% year over year to $218.5 million. Management flagged accelerated data-center purchases to lock in prices.
FY27 free cash flow margin is guided to 23.0%-23.5%, a step down from the mid-to-high 20s the business posted earlier in FY26. That is the number bears will point at.
Rising capex intensity for an AI infrastructure buildout is a defensible choice if it protects the architectural moat around the Zero Trust Exchange, which processes more than 500 billion transactions per day.
A gross margin of roughly 80% gives the company room to absorb higher hardware costs without breaking the operating model.
AI Threat Thesis and What the Price Has to Deliver Seema Mody noted the report comes as cybersecurity firms respond to growing cyber threats from AI agents. Every vendor is telling a version of this story, so the question is whether enterprises are opening genuinely new budget lines or relabeling security spending they were already going to do.
The evidence for a real budget line is thin but improving. AI Protect bookings have crossed $100 million over the past 12 months, which is meaningful but small relative to the ARR base.
Shares closed at $177.80, still down 34.29% over the last year. The forward multiple sits at roughly 39x on FY27 non-GAAP EPS, with an analyst target of $199.34.
That price still leaves room if organic ARR growth holds near 20% and non-GAAP margins continue to expand. The thesis breaks if organic ARR growth decelerates into the mid-teens while capex remains elevated, because the free cash flow story justifies the multiple.
The AI label is doing real work in the current valuation. The next two quarters of net new ARR will settle whether it should.
Contact [email protected] for any questions or corrections.
Zscaler Inc (NASDAQ:ZS) reported better-than-expected financial results for the fourth quarter of fiscal 2026 and issued strong guidance for fiscal 2027 on Thursday.
Zscaler reported fourth-quarter revenue of $898.16 million, beating the consensus estimate of $877.36 million. The company posted fourth-quarter adjusted earnings of $1.19 per share, beating analyst estimates of $1.08 per share, according to Benzinga Pro.
"AI represents one of the most significant opportunities in Zscaler’s history. By connecting users, workloads, branches, and now agents directly to the applications they need without placing them on the network, we are uniquely equipped to help companies both combat the threats created by agentic AI and securely deploy AI agents and models," said Jay Chaudhry, chairman and CEO of Zscaler.
Zscaler sees first-quarter revenue in the range of $935 million to $939 million versus estimates of $927.02 million. The company anticipates first-quarter adjusted earnings of $1.15 to $1.16 per share versus estimates of $1.08 per share.
Zscaler guided for fiscal 2027 revenue of approximately $3.91 billion to $3.94 billion and full-year adjusted earnings of $4.86 to $4.90 per share. Analysts are currently forecasting full-year revenue of $3.90 billion and adjusted earnings of $4.60 per share.
Trending
Zscaler shares fell 4.1% to trade at $170.56 on Friday.
These analysts made changes to their price targets on Zscaler following earnings announcement.
Needham analyst Mike Cikos maintained the stock with a Buy and raised the price target from $180 to $215. Stephens & Co. analyst Todd Weller maintained the stock with an Overweight rating and raised the price target from $200 to $225. Barclays analyst Peter Weed maintained the stock with an Overweight rating and raised the price target from $192 to $200. Scotiabank analyst Patrick Colville maintained the stock with a Sector Outperform and boosted the price target from $175 to $200. Considering buying ZS stock? Here’s what analysts think:
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Zscaler Inc. (NASDAQ:ZS) reported fiscal fourth-quarter revenue and adjusted profit that topped Wall Street estimates on Friday, but a sharp decline in free cash flow sent shares of the cybersecurity company down 3.5%.
Free cash flow came in at $60.8 million, missing estimates of $66.9 million and falling 65% from a year earlier, even as the company posted revenue of $898.2 million for the quarter, above analyst estimates of $877 million and up 25% from a year earlier. Adjusted earnings per share came in at $1.19, compared with estimates of $1.09, marking a 34% increase year-over-year.
Annual recurring revenue (ARR) reached $3.77 billion, up 25% from the same period last year, while non-GAAP operating income was $218.4 million against estimates of $207 million, representing a 24% margin.
Net new ARR totaled $246 million, up 24% year-over-year. Deferred revenue rose 19% to $2.93 billion.
For fiscal 2027, Zscaler guided revenue of approximately $3.91 billion to $3.94 billion, roughly in line with estimates of $3.9 billion. The company forecast non-GAAP operating income of $924 million to $932 million, above estimates of $903 million, and adjusted EPS of $4.86 to $4.90, topping estimates of $4.60. The company expects ARR of $4.40 billion to $4.43 billion, gross margin of approximately 80%, and free cash flow margin of 23% to 23.5%.
For the first quarter, Zscaler guided revenue of $935 million to $939 million, above estimates of $927 million. The company forecast non-GAAP operating income of $215 million to $217 million, versus estimates of $209 million, and adjusted EPS of approximately $1.15 to $1.16, above estimates of $1.08. Gross margin is expected to be approximately 80%.
Jefferies said Zscaler's results reflected improved sales execution despite an ongoing leadership transition, with the firm pointing to record quarterly sales productivity as evidence that disruption concerns were outweighed by strong performance. The firm characterized fiscal 2027 guidance as intentionally cautious, tied to the time needed for new sales leaders to settle in and for newer AI security offerings to scale, and framed the outlook as back-end weighted toward the second half of the year.
Jefferies said it believes the guidance leaves room for upside once both leadership changes are complete and the newer products have ramped further.
ZScaler (ZS) couldn't muscle an earnings rally for cybersecurity like CrowdStrike (CRWD) did last week. Diane King Hall points to slowing growth as the culprit dragging shares down.
Zscaler, Inc. remains a Buy, supported by robust Q4 results, upbeat FY 2027 guidance, and a compelling growth-adjusted valuation. ZS delivered Q4 non-GAAP EPS of $1.19 (beat), revenue up 25% YoY, and ARR of $3.77B, reflecting strong product momentum. Management projects FY 2027 revenue of $3.91B–$3.94B, non-GAAP EPS of $4.86–$4.90, and free cash flow margin around 23%.
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ZS' Q4 earnings and revenues top estimates as rising platform adoption, AI demand and broad geographic growth drive 25% revenue growth and stronger ARR.
SAN JOSE, Calif., Sept. 04, 2026 (GLOBE NEWSWIRE) -- Zscaler, Inc. (NASDAQ: ZS), the leader in cloud security, today announced that its management team is scheduled to present at upcoming investor conferences. Details for each event are as follows:
Goldman Sachs Communacopia + Technology Conference in San Francisco
Wednesday, September 9, 2026
Kevin Rubin, Chief Financial Officer
8:50 a.m. PT (11:50 a.m. ET)
Citi 2026 Global TMT Conference in New York
Wednesday, September 9, 2026
Jay Chaudhry, Chairman and Chief Executive Officer
9:35 a.m. PT (12:35 p.m. ET)
Sessions that offer a webcast will be available on the “Events & Presentations” section of the Zscaler Investor Relations website at https://ir.zscaler.com.
About Zscaler
Zscaler (NASDAQ: ZS) accelerates digital transformation so customers can be more agile, efficient, resilient, and secure. The Zscaler Zero Trust Exchange™ platform protects thousands of customers from cyberattacks and data loss by securely connecting users, devices, and applications in any location. Distributed across over 200 public data centers globally and thousands of private sites at the edge, the SASE-based Zero Trust Exchange is the world’s largest in-line cloud security platform.
Zscaler™ and the other trademarks listed at https://www.zscaler.com/legal/trademarks are either (i) registered trademarks or service marks or (ii) trademarks or service marks of Zscaler, Inc. in the United States and/or other countries. Any other trademarks are the properties of their respective owners.
Zscaler™ and the other trademarks listed at https://www.zscaler.com/legal/trademarks are either (i) registered trademarks or service marks or (ii) trademarks or service marks of Zscaler, Inc. in the United States and/or other countries. Any other trademarks are the properties of their respective owners.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Zscaler Inc. (NASDAQ:ZS) shares are trading lower Friday despite reporting better-than-expected fourth-quarter financial results and issuing strong guidance on Thursday after the market closed.
Zscaler shares are experiencing downward pressure. What’s driving ZS stock lower? Q4 Tops Estimates with Strong ARR GrowthZscaler reported adjusted earnings per share of $1.19, beating the consensus estimate of $1.08. In addition, the company reported revenue of $898.185 million, beating the consensus estimate of $877.364 million.
Annual recurring revenue grew 25% year-over-year to $3.77 billion, of which $246 million was net new ARR during the quarter. Excluding the acquisition of Red Canary, which contributed $141 million in ARR, ARR grew 20% to $3.63 billion and net new ARR grew 17%. Non-GAAP operating margin reached a record 24%.
“AI represents one of the most significant opportunities in Zscaler’s history. By connecting users, workloads, branches, and now agents directly to the applications they need without placing them on the network, we are uniquely equipped to help companies both combat the threats created by agentic AI and securely deploy AI agents and models,” said Jay Chaudhry, CEO, Chairman and Founder of Zscaler.
Q1, FY27 GuidanceZscaler sees first-quarter adjusted earnings per share of $1.15 to $1.16, versus the consensus estimate of $1.08, and revenue of $935.000 million to $939.000 million, versus the consensus estimate of $927.024 million.
For fiscal-year 2027, the company sees adjusted earnings per share of $4.86 to $4.90, versus the consensus estimate of $4.60, and revenue of $3.908 billion to $3.938 billion, versus the consensus estimate of $3.899 billion.
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Zscaler Shares Trade LowerZS Price Action: At the time of publication, Zscaler shares are trading 3.35% lower at $171.85, according to data from Benzinga Pro.
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Zscaler NASDAQ: ZS reported fourth-quarter fiscal 2026 revenue of $898 million, up 25% from a year earlier and 6% sequentially, as the cybersecurity company cited continued demand for its zero-trust platform, data security offerings and AI-related products.
Live 4 updates · Last at 4:53pm ET Updates appear automatically.
By Thomas Richmond · Updated Sep 3, 4:53pm ET · Published Sep 3, 3:07pm ET
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
Live UpdatesNewest first
That wraps up our initial coverage of Zscaler’s Q4 results. Thank you for stopping by!
Zscaler just reported Q4 earnings, with shares initially ripping 8% higher following the report. Here are the key numbers:
Revenue: $898.2M vs. $877.2M expected Adjusted EPS: $1.19 vs. $1.09 expected Guidance:
Revenue: $X vs. $X expected EPS: $X vs. $X expected Quick Read:
Zscaler beat across the top and bottom lines, with revenue coming in roughly 2.4% ahead of expectations and adjusted EPS beating by about 9%.
Attention now turns to fiscal 2027 guidance and ARR growth, which are likely to determine whether investors see Zscaler’s recent slowdown as temporary or structural.
The full-chain put/call ratio on Zscaler (NASDAQ:ZS) sits at , a call-heavy skew that fits with today’s pre-earnings rally to . Front-week contracts expiring show a ratio of , suggesting traders are leaning long into the event.
The expiration prints a ratio of , and spikes to , pointing to sizable protective put positioning or hedged institutional bets.
History urges caution: the last three reports produced day-of drops of , , and despite beats. One-week reactions were kinder, with Q2 FY26 rebounding and Q3 FY26 recovering .
Bottom line: options lean bullish, but overnight gap risk is real.
Zscaler reports Q4 earnings after the bell tonight, with investors focused on ARR growth and management’s outlook for fiscal 2027.
The stock has fallen roughly 37% over the past year, and concerns have shifted from demand toward the company’s growth outlook and free cash flow. Higher capital expenditures have pressured expected free cash flow margins.
Investors will also be watching momentum across AI Protect, ZFlex, and Zero Trust Branch. Strong adoption could reinforce Zscaler’s broader platform story and show that rising AI security demand is translating into recurring revenue.
A clean beat and encouraging fiscal 2027 outlook could help restart a re-rating in the shares. Anything softer could extend the multiple compression that has weighed on Zscaler over the past year.
This article is updated throughout the trading day. Check back for more.
Full CoverageThe story so far
Zscaler (NASDAQ:ZS | ZS Price Prediction) is expected to report Q4 FY2026 results after the bell at 4:05 PM ET. Shares are down about 23.2% year to date, and the setup pairs a raised full-year guide with a cautious fiscal 2027 framing that has reset investor expectations.
Guidance Reset Meets Product Momentum Last quarter, revenue rose 25.4% to $850.48 million, ahead of the $835.66 million consensus, while non-GAAP EPS of $1.08 topped estimates by 7.11%. ARR reached $3.525 billion on $166M net new, and non-GAAP operating margin hit an all-time high of 23%.
Even so, shares fell 31.52% on the day as management cut FY2026 free cash flow margin guidance to 22.8% to 23.3% from 26.5% to 27% on higher capex, and an early FY2027 outlook called for 16% to 17% ARR and revenue growth. Sentiment has since improved, with the stock up 11.83% over the past month.
Consensus Estimates Metric Q4 FY2026 Est YoY Change FY2026 Est FY2027 Est Revenue $877.6M +22% $3.33B $3.90B EPS (Normalized) $1.09 +22% $4.1332 $4.5978 Revisions skew positive at the fiscal year level, with 44 upward FY2026 EPS revisions in the last 30 days versus 1 downward. FY2027 is more contested at 26 up and 19 down, reflecting the debate over margin recovery and Red Canary contribution.
What I’m Watching Tonight: ARR Composition, Margins, and FY2027 Framing Wall Street is looking for CEO Jay Chaudhry’s team to show that the raised full-year targets convert into a Q4 beat. I’ll be watching ARR against the $3.740-$3.749 billion FY guide, focusing on the organic net new ARR excluding Red Canary, which management called approximately 9.5% growth.
Free cash flow deserves equal attention. Zscaler is accelerating data-center equipment purchases into Q4 to lock in current prices amid memory, storage, and processor constraints. Analysts will likely focus on whether operating cash flow scales enough to cover the increase in capex.
Product momentum matters too. Zero Trust Everywhere ended Q3 with more than 700 enterprises versus over 550 in Q2, AI Protect bookings crossed $100 million over 12 months, and ZFlex delivered just over $480 million in TCV during Q3.
Finally, I’ll be watching how CEO Chaudhry frames the two sales leader departures that seeded conservative FY2027 guidance, and any insights on new-logo coverage in the 2,000 to 10,000 user mid-market segment.
Earnings History Quarter EPS Surprise Day-of Move 1-Week Move 30-Day Move Q3 FY2026 +7.11% -31.52% +6.3% +8.85% Q2 FY2026 +12.56% -12.17% +11.61% -4.56% Q1 FY2026 +11.42% -13.03% -4.02% -9.74% Q4 FY2025 +11.03% -1.45% +3.03% +12.87% On average, shares moved +2.31% seven days after earnings across the past 10 reported beats.
Contact [email protected] for any questions or corrections.
Thomas Richmond
Thomas Richmond is a financial writer and content strategist with 5+ years of experience covering stocks and financial markets. He has published over 250 articles focused on individual stock analysis, helping investors better understand business fundamentals, stock valuations, and long-term opportunities.
Thomas previously served as a Content Lead at TIKR, a stock research platform, where he helped scale the company’s blog to hundreds of articles per month and contributed to a weekly newsletter reaching more than 100,000 investors.
He specializes in breaking down complex companies into clear, actionable insights for everyday investors, with a focus on fundamentals-driven research.
His work has also been featured on platforms including Seeking Alpha and Sure Dividend.
Outside of work, Thomas enjoys weight lifting and soccer.
The company reported a loss of $3.37 million and said it would restructure and cut 3% of its workforce as it reallocates resources to support its AI and growth initiatives.
Zscaler (ZS - Free Report) came out with quarterly earnings of $1.19 per share, beating the Zacks Consensus Estimate of $1.09 per share. This compares to earnings of $0.89 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of +9.17%. A quarter ago, it was expected that this cloud-based information security provider would post earnings of $1 per share when it actually produced earnings of $1.08, delivering a surprise of +8%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times.
Zscaler, which belongs to the Zacks Security industry, posted revenues of $898.19 million for the quarter ended July 2026, surpassing the Zacks Consensus Estimate by 2.40%. This compares to year-ago revenues of $719.23 million. The company has topped consensus revenue estimates four times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
Zscaler shares have lost about 23.2% since the beginning of the year versus the S&P 500's gain of 12%.
What's Next for Zscaler?While Zscaler has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for Zscaler was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.06 on $922.95 million in revenues for the coming quarter and $4.51 on $3.89 billion in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Security is currently in the top 17% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Another stock from the broader Zacks Computer and Technology sector, Accenture (ACN - Free Report) , has yet to report results for the quarter ended August 2026. The results are expected to be released on October 1.
This consulting company is expected to post quarterly earnings of $3.19 per share in its upcoming report, which represents a year-over-year change of +5.3%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.
Accenture's revenues are expected to be $18.01 billion, up 2.4% from the year-ago quarter.
Characteristics and Risks of Standardized Options: https://bit.ly/2v9tH6D. Kevin Hincks says ZScaler (ZS) has been punished for conservative guidance in the past.
Achieves strong Q4 and FY26 revenue growth of 25% year over year
Generates Q4 and FY26 ARR growth of 25% year over year
SAN JOSE, Calif., Sept. 03, 2026 (GLOBE NEWSWIRE) -- Zscaler, Inc. (Nasdaq: ZS), the leader in cloud security, today announced financial results for its fiscal fourth quarter and fiscal year ended July 31, 2026.
“AI represents one of the most significant opportunities in Zscaler's history. By connecting users, workloads, branches, and now agents directly to the applications they need without placing them on the network, we are uniquely equipped to help companies both combat the threats created by agentic AI and securely deploy AI agents and models,” said Jay Chaudhry, CEO, Chairman and Founder of Zscaler. “Our continued innovation across Zero Trust SASE, Agentic SecOps, Data Security, and Security for AI is driving increased platform adoption and creating new avenues for growth, as reflected in our strong Q4 results. As AI becomes foundational to how organizations operate, we are well positioned to extend our leadership as the cybersecurity platform for the AI era.”
“We delivered a strong fourth quarter, with revenue and ARR both growing 25% year over year, net new ARR growing 24%, and non-GAAP operating margin reaching a record 24%,” said Kevin Rubin, chief financial officer of Zscaler. “Our growth engine continues to broaden beyond users, with a strong contribution from non-seat-based solutions, continued Z-Flex momentum, record large-deal activity, and improving sales productivity. I am excited about our momentum as we enter fiscal 2027.”
Fourth Quarter Fiscal 2026 Results
Revenue: Grew 25% year over year to $898.2 million.ARR: Grew 25% year over year to $3,771 million, of which $246 million was net new ARR during the fourth quarter of fiscal 2026. Excluding the acquisition of Red Canary, which contributed ARR of $141 million, ARR grew 20% to $3,630 million and net new ARR grew 17%.Income (loss) from operations: GAAP loss from operations was $15.5 million, or 2% of revenue, compared to $32.2 million, or 4% of revenue, in the fourth quarter of fiscal 2025. Non-GAAP income from operations was $218.4 million, or a record 24% of revenue, compared to $158.9 million, or 22% of revenue, in the fourth quarter of fiscal 2025.Net income (loss): GAAP net loss was $3.4 million, compared to $17.6 million in the fourth quarter of fiscal 2025. Non-GAAP net income was $198.2 million, compared to $146.7 million in the fourth quarter of fiscal 2025.Net income (loss) per share, diluted: GAAP net loss per share, diluted, was $0.02, compared to $0.11 in the fourth quarter of fiscal 2025. Non-GAAP net income per share was $1.19, compared to $0.89 in the fourth quarter of fiscal 2025.Cash flow: Cash provided by operations was $279.3 million, or 31% of revenue, compared to $250.6 million, or 35% of revenue, in the fourth quarter of fiscal 2025. Free cash flow was $60.8 million, or 7% of revenue, compared to $171.9 million, or 24% of revenue, in the fourth quarter of fiscal 2025, reflecting capex and internal use software of $218.5 million in the fourth quarter of fiscal 2026 versus $78.7 million in the fourth quarter of fiscal 2025.Deferred revenue: Grew 19% year over year to $2,926 million as of July 31, 2026. Full Year Fiscal 2026 Results
Revenue: Grew 25% year over year to $3,353 million. Excluding the acquisition of Red Canary, Revenue grew 20% to $3,209 million.Income (loss) from operations: GAAP loss from operations was $133.3 million, or 4% of revenue, compared to $128.5 million, or 5% of revenue, in fiscal 2025. Non-GAAP income from operations was $767.1 million, or 23% of revenue, compared to $580.1 million, or 22% of revenue, in fiscal 2025.Net income (loss): GAAP net loss was $63.2 million, compared to $41.5 million in fiscal 2025. Non-GAAP net income was $704.2 million, compared to $534.8 million in fiscal 2025.Net income (loss) per share, diluted: GAAP net loss per share, diluted, was $0.39, compared to $0.27 in fiscal 2025. Non-GAAP net income per share was $4.21, compared to $3.28 in fiscal 2025.Cash flow: Cash provided by operations was $1,130 million, or 34% of revenue, compared to $972.5 million, or 36% of revenue, in fiscal 2025. Free cash flow was $779.1 million, or 23% of revenue, compared to $726.7 million, or 27% of revenue, in fiscal 2025. Change in Non-GAAP Measures Presentation
Beginning in fiscal 2026, we adopted a long-term projected non-GAAP tax rate of 21%, reduced from the previous rate of 23% which was applied to all prior periods. This adjustment aligns with the enactment of the One Big Beautiful Bill Act. The revised tax rate will apply prospectively. We will continue to assess the appropriate non-GAAP tax rate on a regular basis, which could be subject to changes for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix, or other changes to our strategy or business operations.
Financial Outlook
For the first quarter of fiscal 2027, the company expects:
Revenue of $935 million to $939 million, approximately 19% year-over-year growth.Non-GAAP gross margin of approximately 80%Non-GAAP income from operations of $215 million to $217 million, approximately 25% to 26% year-over-year growth, representing a 23% operating margin.Non-GAAP net income per share of approximately $1.15 to $1.16, assuming approximately 170 million fully diluted shares outstanding and a non-GAAP tax rate of 21%. For the full year fiscal 2027, the company expects:
ARR of $4.396 billion to $4.426 billion, growth of approximately 16.6% to 17.4%.Revenue of approximately $3.908 billion to $3.938 billion, growth of 16.6% to 17.5%.Non-GAAP gross margin of approximately 80%Non-GAAP income from operations of $924 million to $932 million, growth of approximately 21%.Non-GAAP net income per share of $4.86 to $4.90, assuming approximately 173 million fully diluted shares outstanding and a non-GAAP tax rate of 21%.Free cash flow margin of approximately 23.0 to 23.5%. These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.
Guidance for non-GAAP income from operations and non-GAAP net income per share exclude, as applicable, stock-based compensation expense and related employer payroll taxes, amortization expense of acquired intangible assets and amortization of debt issuance costs. We have not reconciled our expectations of non-GAAP income from operations and non-GAAP net income per share to their most directly comparable GAAP measures because certain items are out of our control or cannot be reasonably predicted. For those reasons, we are also unable to address the probable significance of the unavailable information, the variability of which may have a significant impact on future results. Accordingly, a reconciliation for the guidance for non-GAAP income from operations and non-GAAP net income per share is not available without unreasonable effort.
For further information regarding why we believe that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the "Explanation of Non-GAAP Financial Measures" section of this press release.
Conference Call and Webcast Information
Zscaler will host a conference call for analysts and investors to discuss its fourth quarter of fiscal 2026 and outlook for its first quarter of fiscal 2027 and full year fiscal 2027 today at 1:30 p.m. Pacific time (4:30 p.m. Eastern time).
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including, but not limited to, statements regarding our future financial and operating performance, including our financial outlook for the first quarter of fiscal 2027 and full year fiscal 2027. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including but not limited to: macroeconomic influences and instability, geopolitical events, operations and financial results and the economy in general; risks related to the use of AI in our platform; our ability to identify and effectively implement the necessary changes to address execution challenges; risks associated with managing our rapid growth, including fluctuations from period to period; our limited experience with new products and subscription and support introductions and the risks associated with new products and subscription and support offerings, including the discovery of software bugs; our ability to attract and retain new customers; the failure to timely develop and achieve market acceptance of new products and subscriptions as well as existing products and subscriptions and support; rapidly evolving technological developments in the market for network security products and subscription and support offerings and our ability to remain competitive; length of sales cycles; useful lives of our assets and other estimates; and general market, political, economic and business conditions.
Additional risks and uncertainties that could affect our financial results are included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth from time to time in our filings and reports with the Securities and Exchange Commission ("SEC"), including our Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2026, filed on May 26, 2026, as well as future filings and reports by us, copies of which are available on our website at ir.zscaler.com and on the SEC’s website at www.sec.gov. You should not rely on these forward-looking statements, as actual outcomes and results may differ materially from those contemplated by these forward-looking statements as a result of such risks and uncertainties. Additional information will also be set forth in other filings that we make with the SEC from time to time. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.
Use of Non-GAAP Financial Information
We believe that the presentation of non-GAAP financial information provides important supplemental information to management and investors regarding financial and business trends relating to our financial condition and results of operations. For further information regarding why we believe that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the “Explanation of Non-GAAP Financial Measures” section of this press release.
About Zscaler
Zscaler (NASDAQ: ZS) accelerates digital transformation so customers can be more agile, efficient, resilient, and secure. The Zscaler Zero Trust Exchange™ platform protects thousands of customers from cyberattacks and data loss by securely connecting users, devices, and applications in any location. Distributed across over 200 public data centers globally and thousands of private sites at the edge, the SASE-based Zero Trust Exchange is the world’s largest in-line cloud security platform.
Zscaler™ and the other trademarks listed at https://www.zscaler.com/legal/trademarks are either (i) registered trademarks or service marks or (ii) trademarks or service marks of Zscaler, Inc. in the United States and/or other countries. Any other trademarks are the properties of their respective owners.
Investor Relations Contacts
Kim Watkins
SVP, Investor Relations & Strategic Finance [email protected]
ZSCALER, INC.Condensed Consolidated Statements of Operations(in thousands, except per share amounts)(unaudited) Three Months Ended Year Ended July 31, July 31, 2026 2025 2026 2025 Revenue$898,185 $719,226 $3,352,523 $2,673,115 Cost of revenue(1) (2) (3) 208,964 172,240 777,629 618,178 Gross profit 689,221 546,986 2,574,894 2,054,937 Operating expenses: Sales and marketing(1) (2)(3) 381,363 330,594 1,495,812 1,259,158 Research and development(1) (2) (3) 241,483 177,606 903,399 672,485 General and administrative(1)(3)(4) 81,867 71,028 308,950 251,754 Total operating expenses 704,713 579,228 2,708,161 2,183,397 Loss from operations (15,492) (32,242) (133,267) (128,460)Interest income 35,042 33,175 136,132 125,364 Interest expense(5) (2,746) (2,074) (11,794) (9,522)Other expense, net (1,900) (762) (8,210) (5,673)Income (loss) before income taxes 14,904 (1,903) (17,139) (18,291)Provision for income taxes 18,273 15,675 46,040 23,187 Net loss$(3,369) $(17,578) $(63,179) $(41,478)Net loss per share, basic and diluted$(0.02) $(0.11) $(0.39) $(0.27)Weighted-average shares used in computing net loss per share, basic and diluted 161,872 156,496 160,219 154,404
(1) Includes stock-based compensation expense and related payroll taxes:
Cost of revenue$22,978 $19,324 $87,469 $70,998 Sales and marketing 69,116 60,780 294,537 259,562 Research and development 93,176 69,149 341,880 257,663 General and administrative 29,938 31,542 117,762 97,311 Total$215,208 $180,795 $841,648 $685,534
(2) Includes amortization expense of acquired intangible assets:
Cost of revenue$8,003 $3,655 $27,855 $14,975 Sales and marketing 4,277 425 15,613 1,700 Research and development — — — 145 Total$12,280 $4,080 $43,468 $16,820
(3) Includes restructuring and other charges:
Cost of revenue$583 $138 $1,333 $138 Sales and marketing 3,692 — 6,501 — Research and development 617 4,783 1,799 4,783 General and administrative 627 — 627 — Total$5,519 $4,921 $10,260 $4,921 (4) Includes acquisition-related expenses:$923 $1,316 $5,000 $1,316 (5) Includes amortization of debt issuance costs:$2,045 $1,346 $8,166 $4,293
ZSCALER, INC.Condensed Consolidated Balance Sheets(in thousands)(unaudited) July 31, July 31, 2026 2025 Assets Current assets: Cash and cash equivalents$928,354 $2,389,023 Short-term investments 2,545,797 1,183,386 Accounts receivable, net 1,149,073 992,181 Deferred contract acquisition costs 215,577 180,819 Prepaid expenses and other current assets 192,432 148,881 Total current assets 5,031,233 4,894,290 Property and equipment, net 753,001 543,377 Operating lease right-of-use assets 137,231 89,772 Deferred contract acquisition costs, noncurrent 402,423 328,722 Acquired intangible assets, net 214,355 47,323 Goodwill 1,218,098 417,730 Other noncurrent assets 110,373 98,674 Total assets$7,866,714 $6,419,888 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable$47,972 $46,906 Accrued expenses and other current liabilities 133,304 93,984 Accrued compensation 234,640 181,807 Deferred revenue 2,480,501 2,054,417 Operating lease liabilities 64,894 52,497 Total current liabilities 2,961,311 2,429,611 Convertible senior notes 1,696,355 1,700,727 Deferred revenue, noncurrent 445,272 413,609 Operating lease liabilities, noncurrent 94,575 43,352 Other noncurrent liabilities 70,940 33,316 Total liabilities 5,268,453 4,620,615 Stockholders’ Equity Common stock 163 159 Additional paid-in capital 3,874,379 2,980,591 Accumulated other comprehensive income (loss) (23,544) 8,081 Accumulated deficit (1,252,737) (1,189,558)Total stockholders’ equity 2,598,261 1,799,273 Total liabilities and stockholders’ equity$7,866,714 $6,419,888
ZSCALER, INC.Condensed Consolidated Statements of Cash Flows(in thousands)(unaudited) Three Months Ended Year Ended July 31, July 31, 2026 2025 2026 2025 Cash Flows from Operating Activities Net loss$(3,369) $(17,578) $(63,179) $(41,478)Adjustments to reconcile net loss to cash provided by operating activities: Depreciation and amortization expense 42,933 30,260 148,544 104,361 Amortization expense of acquired intangible assets 12,280 4,080 43,468 16,820 Amortization of deferred contract acquisition costs 54,018 44,811 203,693 166,310 Amortization of debt issuance costs 2,045 1,346 8,166 4,293 Operating lease costs 22,487 15,102 82,934 62,998 Stock-based compensation expense 211,591 172,654 821,923 661,350 Accretion of investments purchased at a discount (87) (2,061) (4,655) (15,923)Unrealized (gains) losses on hedging transactions, net 264 1,231 (772) 369 Deferred income taxes (20,713) 3,490 (20,387) (14,351)Other 627 (72) 7,484 987 Changes in operating assets and liabilities, net of effects of business acquisitions: Accounts receivable (420,031) (376,516) (139,989) (256,010)Deferred contract acquisition costs (127,492) (90,467) (312,152) (230,453)Prepaid expenses, other current and noncurrent assets 977 (29,390) (28,076) (41,572)Accounts payable 9,365 (11,415) (10,627) 17,532 Accrued expenses, other current and noncurrent liabilities 18,243 12,213 36,417 5,180 Accrued compensation 54,003 26,690 44,590 20,997 Deferred revenue 445,776 483,041 379,873 573,052 Operating lease liabilities (23,632) (16,815) (67,601) (62,009)Net cash provided by operating activities 279,285 250,604 1,129,654 972,453 Cash Flows from Investing Activities Purchases of property, equipment and other assets (199,837) (60,046) (277,304) (164,252)Capitalized internal-use software (18,684) (18,637) (73,207) (81,508)Payments for business acquisitions, net of cash acquired (148,026) — (918,074) (834)Purchase of strategic investments (6,171) (38) (10,413) (824)Purchases of short-term investments (282,564) (393,993) (2,254,279) (1,280,629)Proceeds from maturities of short-term investments 171,232 225,132 589,880 1,101,025 Proceeds from sale of short-term investments 113,097 — 290,665 — Net cash used in investing activities (370,953) (247,582) (2,652,732) (427,022)Cash Flows from Financing Activities Proceeds from issuance of common stock upon exercise of stock options — 84 3,984 3,581 Proceeds from issuance of common stock under the employee stock purchase plan 37,910 41,219 59,416 63,563 Payment of holdback amounts related to a business acquisition — (352) (110) (792)Proceeds from issuance of the 2028 convertible senior notes — 1,725,000 — 1,725,000 Payments for issuance costs related to the 2028 convertible senior notes — (24,150) (684) (24,150)Purchases of capped calls related to the 2028 convertible senior notes — (196,650) (197) (196,650)Payments for settlement of the 2025 convertible senior notes — (1,150,040) — (1,150,040)Net cash provided by financing activities 37,910 395,111 62,409 420,512 Net increase (decrease) in cash and cash equivalents (53,758) 398,133 (1,460,669) 965,943 Cash and cash equivalents at beginning of period 982,112 1,990,890 2,389,023 1,423,080 Cash and cash equivalents at end of period$928,354 $2,389,023 $928,354 $2,389,023
ZSCALER, INC.Reconciliation of GAAP to Non-GAAP Financial Measures(in thousands, except percentages)(unaudited) Three Months Ended Year Ended July 31, July 31, 2026 2025 2026 2025 Revenue$898,185 $719,226 $3,352,523 $2,673,115 Non-GAAP Gross Profit and Non-GAAP Gross Margin GAAP gross profit$689,221 $546,986 $2,574,894 $2,054,937 Add: Stock-based compensation expense and related payroll taxes(1) 22,978 19,324 87,469 70,998 Amortization expense of acquired intangible assets 8,003 3,655 27,855 14,975 Restructuring and other charges 583 138 1,333 138 Non-GAAP gross profit$720,785 $570,103 $2,691,551 $2,141,048 GAAP gross margin 77% 76% 77% 77%Non-GAAP gross margin 80% 79% 80% 80% Non-GAAP Income from Operations and Non-GAAP Operating Margin GAAP loss from operations$(15,492) $(32,242) $(133,267) $(128,460)Add: Stock-based compensation expense and related payroll taxes(2) 215,208 180,795 841,648 685,534 Amortization expense of acquired intangible assets 12,280 4,080 43,468 16,820 Restructuring and other charges 5,519 4,921 10,260 4,921 Acquisition-related expenses 923 1,316 5,000 1,316 Non-GAAP income from operations$218,438 $158,870 $767,109 $580,131 GAAP operating margin(2)% (4)% (4)% (5)%Non-GAAP operating margin 24% 22% 23% 22%
(1) Includes acquisition-related stock-based compensation expense and related payroll taxes of $0.1 million for the fourth quarter of fiscal 2025, and $0.1 million and $0.2 million for fiscal 2026 and fiscal 2025, respectively. Acquisition-related stock-based compensation includes deferred merger consideration subject to post-combination service vesting conditions, performance stock awards, and acquisition replacement awards.
(2) Includes acquisition-related stock-based compensation expense and related payroll taxes of $19.8 million and $8.2 million for the fourth quarter of fiscal 2026 and fiscal 2025, respectively, and $57.4 million and $33.1 million for fiscal 2026 and fiscal 2025, respectively.
ZSCALER, INC.Reconciliation of GAAP to Non-GAAP Financial Measures(in thousands, except per share amounts)(unaudited) Three Months Ended Year Ended July 31, July 31, 2026 2025 2026 2025 Non-GAAP Net Income per Share, Diluted Net loss$(3,369) $(17,578) $(63,179) $(41,478)Add: GAAP provision for income taxes 18,273 15,675 46,040 23,187 GAAP income (loss) before income taxes 14,904 (1,903) (17,139) (18,291)Add: Stock-based compensation expense and related payroll taxes(1) 215,208 180,795 841,648 685,534 Amortization expense of acquired intangible assets 12,280 4,080 43,468 16,820 Restructuring and other charges 5,519 4,921 10,260 4,921 Acquisition-related expenses 923 1,316 5,000 1,316 Amortization of debt issuance costs 2,045 1,346 8,166 4,293 Non-GAAP net income before income taxes 250,879 190,555 891,403 694,593 Non-GAAP provision for income taxes(2) 52,684 43,830 187,193 159,757 Non-GAAP net income$198,195 $146,725 $704,210 $534,836 GAAP provision for income taxes 18,273 15,675 46,040 23,187 Add: Income tax and other tax adjustments(2) 34,411 28,155 141,153 136,570 Non-GAAP provision for income taxes(2)$52,684 $43,830 $187,193 $159,757 Non-GAAP effective tax rate(2) 21% 23% 21% 23% Non-GAAP net income$198,195 $146,725 $704,210 $534,836 Add: Non-GAAP interest expense, net of tax related to the convertible senior notes — 183 — 1,011 Numerator used in computing non-GAAP net income per share, diluted$198,195 $146,908 $704,210 $535,847 GAAP net loss per share, diluted$(0.02) $(0.11) $(0.39) $(0.27)Stock-based compensation expense and related payroll taxes(3) 1.29 1.09 5.04 4.20 Amortization expense of acquired intangible assets 0.07 0.02 0.26 0.10 Restructuring and other charges 0.03 0.03 0.06 0.03 Acquisition-related expenses 0.01 0.01 0.03 0.01 Amortization of debt issuance costs 0.01 0.01 0.05 0.03 Income tax and other tax adjustments(2) (0.21) (0.17) (0.84) (0.84)Non-GAAP interest expense, net of tax related to the convertible senior notes — — — 0.01 Adjustment to total fully diluted earnings per share(4) 0.01 0.01 — 0.01 Non-GAAP net income per share, diluted$1.19 $0.89 $4.21 $3.28 Weighted-average shares used in computing GAAP net loss per share, diluted 161,872 156,496 160,219 154,404 Add: Outstanding potentially dilutive equity incentive awards 706 4,457 2,959 3,949 Add: Convertible senior notes 3,925 6,211 3,925 7,269 Less: Antidilutive impact of capped call transactions(5) — (1,580) — (2,210)Weighted-average shares used in computing non-GAAP net income per share, diluted 166,503 165,584 167,103 163,412 (1) Includes acquisition-related stock-based compensation expense and related payroll taxes of $19.8 million and $8.2 million for the fourth quarter of fiscal 2026 and fiscal 2025, respectively, and $57.4 million and $33.1 million for fiscal 2026 and fiscal 2025, respectively.
(2) Beginning in fiscal 2026, we adopted a long-term projected non-GAAP tax rate of 21%, reduced from the previous rate of 23%, which was applied to all prior periods. This adjustment aligns with the enactment of the One Big Beautiful Bill Act. The revised tax rate will apply prospectively. We will continue to assess the appropriate non-GAAP tax rate on a regular basis, which could be subject to changes for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix, or other changes to our strategy or business operations.
(3) The dilutive impact of acquisition-related stock-based compensation expense and related payroll taxes was $0.12 and $0.05 per share for the fourth quarter of fiscal 2026 and fiscal 2025, respectively, and $0.34 and $0.20 per share for fiscal 2026 and fiscal 2025, respectively.
(4) The sum of the fully diluted earnings per share impact of individual reconciling items may not total to fully diluted non-GAAP net income per share due to the weighted-average shares used in computing the GAAP net loss per share differs from the weighted-average shares used in computing the non-GAAP net income per share, and due to rounding of the individual reconciling items. The GAAP net loss per share calculation uses a lower share count as it excludes potentially dilutive shares, which are included in calculating the non-GAAP net income per share.
(5) We exclude the in-the-money portion of the convertible senior notes for non-GAAP weighted-average diluted shares as they are covered by our capped call transactions. Our outstanding capped call transactions are antidilutive under GAAP but are expected to mitigate the dilutive effect of the convertible senior notes, and therefore are included in the calculation of non-GAAP diluted shares outstanding. The capped calls have an antidilutive impact when the average stock price of our common stock in a given period is higher than their exercise price.
ZSCALER, INC.Reconciliation of GAAP to Non-GAAP Financial Measures(in thousands, except percentages)(unaudited) Three Months Ended Year Ended July 31, July 31, 2026 2025 2026 2025 Free Cash Flow Net cash provided by operating activities$279,285 $250,604 $1,129,654 $972,453 Less: Purchases of property, equipment and other assets (199,837) (60,046) (277,304) (164,252)Capitalized internal-use software (18,684) (18,637) (73,207) (81,508)Free cash flow$60,764 $171,921 $779,143 $726,693 Free Cash Flow Margin Net cash provided by operating activities, as a percentage of revenue 31% 35% 34% 36%Less: Purchases of property, equipment and other assets, as a percentage of revenue(22)% (8)% (8)% (6)%Capitalized internal-use software, as a percentage of revenue(2)% (3)% (3)% (3)%Free cash flow margin 7% 24% 23% 27%
ZSCALER, INC.
Explanation of Non-GAAP and Other Financial Measures
In addition to our results determined in accordance with generally accepted accounting principles in the United States of America (GAAP), we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, as it has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In particular, free cash flow is not a substitute for cash provided by operating activities. Additionally, the utility of free cash flow as a measure of our liquidity is further limited as it does not represent the total increase or decrease in our cash balance for a given period. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation of our historical non-GAAP financial measures to their most directly comparable financial measures stated in accordance with GAAP has been included in this press release. There is no GAAP measure that is comparable to ARR, so we have not reconciled the ARR data included to any GAAP measure. Investors are cautioned that there are a number of limitations associated with the use of non-GAAP financial measures and key metrics as analytical tools. Investors are encouraged to review these reconciliations, and not to rely on any single financial measure to evaluate our business.
Expenses Excluded from Non-GAAP Measures
Stock-based compensation expense is excluded primarily because it is a non-cash expense that management believes is not reflective of our ongoing operational performance. Employer payroll taxes related to stock-based compensation, which is a cash expense, are excluded because these are tied to the timing and size of the exercise or vesting of the underlying equity incentive awards and the price of our common stock at the time of vesting or exercise, which may vary from period to period independent of the operating performance of our business. Amortization expense of acquired intangible assets and amortization of debt issuance costs from the convertible senior notes are excluded because these are non-cash expenses and are not reflective of our ongoing operational performance. Acquisition-related expenses incurred with business acquisitions are excluded because these are not reflective of our ongoing operational performance. Restructuring and other charges includes severance and termination benefits in connection with a restructuring plan to streamline operations and to align people, roles and projects to our strategic priorities. These expenses are excluded because they fluctuate in amount and frequency and are not reflective of our core business operating performance.
Beginning in fiscal 2026, we adopted a long-term projected non-GAAP tax rate of 21%, reduced from the previous rate of 23% which was applied to all prior periods. This adjustment aligns with the enactment of the One Big Beautiful Bill Act. The revised tax rate will apply prospectively. We will continue to assess the appropriate non-GAAP tax rate on a regular basis, which could be subject to changes for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix, or other changes to our strategy or business operations.
Non-GAAP and Other Financial Measures
Non-GAAP Gross Profit and Non-GAAP Gross Margin. We define non-GAAP gross profit as GAAP gross profit excluding stock-based compensation expense and related employer payroll taxes, amortization expense of acquired intangible assets and restructuring and other charges. We define non-GAAP gross margin as non-GAAP gross profit as a percentage of revenue.
Non-GAAP Income from Operations and Non-GAAP Operating Margin. We define non-GAAP income from operations as GAAP loss from operations excluding stock-based compensation expense and related employer payroll taxes, amortization expense of acquired intangible assets, restructuring and other charges and acquisition-related expenses. We define non-GAAP operating margin as non-GAAP income from operations as a percentage of revenue.
Non-GAAP Net Income per Share, Diluted. We define non-GAAP net income as GAAP net loss excluding stock-based compensation expense and related employer payroll taxes, amortization expense of acquired intangible assets, restructuring and other charges, amortization of debt issuance costs, acquisition-related expenses and the non-GAAP provision for income taxes adjustment. We define non-GAAP net income per share, diluted, as non-GAAP net income plus the applicable non-GAAP interest expense related to the convertible senior notes divided by the weighted-average diluted shares outstanding. The weighted-average diluted shares outstanding includes the effect of potentially diluted common stock equivalents outstanding during the period and the anti-dilutive impact of the capped call transactions entered into in connection with the convertible senior notes.
Annual Recurring Revenue. ARR refers to the next 12 months of revenue from subscription contracts as of the measurement date. To establish ARR for a customer, we assume that any contract expiring during the next 12 months will be renewed under the existing terms.
Bookings. We define bookings as the total customer contract value over the entire duration of each such customer contract. This includes all recurring subscription fees committed for the full term of each such customer contract.
Free Cash Flow and Free Cash Flow Margin. We define free cash flow as net cash provided by operating activities less purchases of property, equipment and other assets and capitalized internal-use software. We define free cash flow margin as free cash flow divided by revenue. We believe that free cash flow and free cash flow margin are useful indicators of liquidity that provide information to management and investors about the amount of cash generated from our operations that, after the investments in property, equipment and other assets and capitalized internal-use software, can be used for strategic initiatives.
Zscaler stock soared on Thursday after the cloud security company beat Wall Street's fiscal fourth-quarter estimates as rising artificial intelligence risk spurred urgent demand for cyber tools.
Here's how the company performed compared to LSEG estimates:
Earnings per share: $1.19 adjusted vs. $1.09 expectedRevenue: $898 million vs. $877 million expectedRevenue jumped 25% from about $719 million last year. Zscaler reported a net loss of $3.37 million, a loss of 2 cents per share, up from a net loss of $17.58 million, a loss of 11 cents per share, a year ago.
CEO Jay Chaudhry said the company's Zero Trust cloud security architecture and innovative technology drove this quarter's beat.
Chaudhry told CNBC he's "very bullish" on the recently launched platform for AI agent iteration, a potentially larger long-term annual recurring revenue opportunity. The tool is gaining early momentum and should accelerate rapidly into 2028 and 2029, he said.
"It's a longer-term opportunity, but I think it's a fantastic opportunity with significant barriers to entry," Chaudhry said.
Annual recurring revenue rose 25% from a year ago to $3.77 billion, beating a $3.75 billion estimate from StreetAccount.
Cybersecurity stocks have skyrocketed this year on demand for new tools to secure swarms of AI agents. The period has also been defined by highly sophisticated cyber models and agent-led attacks capable of bringing down entire systems.
Read more CNBC tech newsApple enters John Ternus era as AI challenges and memory crunch intensifyGoPro joins AI bonanza with pivot into data centers as shares skyrocket 40%AI data center play SB Energy, which is backed by Softbank and Nvidia, files for IPOWaymo and Zoox expand into more U.S. markets as robotaxi race heats upWhile competitors have notched new highs this year, Zscaler shares have plummeted 20%. Last quarter, the stock recorded its worst day ever after management said it was taking a "prudent approach" to guidance following two sales leader departures.
But Chaudhry says the market is misunderstanding Zscaler's differentiation play.
"The core competency we bring to the table is pretty unique, and as the adoption of AI agents happens, the market will recognize more and more that Zscaler is a critical player," he said.
Like other cyber executives, Chaudhry views security for AI as one of the biggest opportunities. Over the last year, bookings totaled $100 million and have grown 50% sequentially, quarter over quarter, he said.
Zscaler's guidance also beat estimates. The company expects $935 million to $939 million in revenue for the first quarter and adjusted EPS of $1.15 to $1.16. That beat a revenue estimate of $927 million and adjusted EPS of $1.08 per share
For the full year, the company projects revenue in the range of $3.91 billion and $3.94 billion, compared to a $3.90 billion estimate. Adjusted EPS is expected to range between $4.86 and $4.90, versus a $4.60 per-share estimate.
After CrowdStrike (CRWD) and Palo Alto Networks (PANW) added confidence to cybersecurity's outlook, investors turn to ZScaler (ZS) earnings as the next test for the sector. Rick Ducat points to the stock's lagging price action and notable resistance areas ahead as key tests for momentum.
Zscaler Inc. (NASDAQ:ZS) shares are in the spotlight, with earnings on deck today, key growth metrics in focus and recent analyst activity all drawing attention.
Zscaler stock is moving in positive territory. Why is ZS stock trading higher? Earnings Preview & HistoryZscaler is scheduled to report fourth-quarter fiscal 2026 earnings today after market close. Analysts estimate EPS of $1.08 along with revenue of $877.36 million. For the prior quarter, Zscaler reported EPS of $1.08, beating the consensus estimate of $1.01. The company also posted revenue of $850.48 million, beating the consensus estimate of $835.38 million.
What to Watch: FY27 Guidance Amid ARR Growth and Margin SignalsInvestors will be closely tracking Zscaler’s first formal fiscal 2027 guidance, since it was the company’s prior outlook — not last quarter’s beat — that triggered a 31.52% single-day plunge in May. Management previously flagged fiscal 2027 revenue growth of only about 16% and ARR growth of roughly 17%, well below the mid-20% range investors had grown accustomed to, making it critical whether the new framework confirms or improves on those figures.
Annual recurring revenue trends will also be in focus, with ARR growing 25% last quarter (21% excluding the Red Canary acquisition) to a non-GAAP operating margin record of 23%, alongside continued momentum in Zero Trust Everywhere customer adoption, which surpassed 700 customers last quarter, up from 210 a year earlier. Commentary on rising capital expenditures tied to AI infrastructure demand, guided toward the high-single-digit percentage of revenue, should offer additional signals on margin trajectory heading into fiscal 2027.
Analyst Consensus & Recent Actions The stock carries a Buy rating with an average price forecast of $197.78. Recent analyst moves include:
JP Morgan: Overweight (Raises Target to $215.00) (Aug. 26) Barclays: Overweight (Raises Target to $192.00) (Aug. 25) Guggenheim: Buy (Maintains Target to $214.00) (Aug. 24) Read Next
Zscaler Shares Edge HigherZS Price Action: At the time of publication, Zscaler shares are trading 3.54% higher at $178.85, according to data from Benzinga Pro.
Image via Shutterstock
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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Zscaler (ZS -3.78%) reports its fiscal fourth-quarter results after the market's close tomorrow, Sept. 3. While several cybersecurity stocks are near all-time highs, Zscaler has been out of favor recently, as management gave cautious guidance in its previous earnings report.
However, with two of the largest cybersecurity companies, CrowdStrike (NASDAQ: CRWD) and Palo Alto Networks (NASDAQ: PANW), recently reporting results that show AI is boosting cybersecurity demand, could Zscaler beat the modest expectations investors have for its business?
Image source: The Motley Fool.
As we've seen numerous times this earnings season, beating top- and bottom-line expectations isn't always enough. With that in mind, here are some of the things I'll be watching tomorrow when the company reports.
3 Things I'll be watchingFirst of all, Zscaler doesn't exactly have a high bar to clear. Management's previous guidance calls for roughly 22% year-over-year revenue growth in the fiscal fourth quarter, and the company has a strong recent history of outperforming its own expectations. In the fiscal third quarter, Zscaler reported 25% growth in both revenue and ARR, as well as its highest-ever adjusted operating margin. But while I'll be watching this, it isn't my main focus.
In the company's fiscal third-quarter report, the problem wasn't Zscaler's top and bottom line. That isn't why the stock fell sharply after the report. It was the guidance. The company's initial fiscal 2027 outlook called for annual recurring revenue growth to slow to just 16%-17%. With CrowdStrike just reporting its highest net new ARR growth rate ever, a significant guidance raise from Zscaler could be a major catalyst for the stock.
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After all, a big reason CrowdStrike is trading near all-time highs is that management issued fiscal 2027 guidance calling for net new ARR growth of 630 basis points (6.3 percentage points) above the previous level.
I'll also be watching the RPO (remaining performance obligation), which essentially tells us Zscaler's revenue backlog. This grew 30% in the fiscal third quarter to $6.5 billion, and if the company continues to book revenue faster than its top-line reflects, it could indicate healthy growth acceleration in the near future.
It's all about the outlookAs we've seen with several other AI-focused businesses in this earnings season, simply beating expectations isn't enough. As I'm writing this, Palo Alto's stock is falling despite topping estimates. The biggest factor is what management says about the future. If the company confirms a deceleration in growth, even a strong top-line beat might not matter. On the other hand, strong guidance would likely make investors far more confident heading into the new fiscal year.
The acceleration of agentic AI and the threats that come with it have forced enterprises to bump up spending on cyber defenses. Zscaler's two largest peers just issued earnings reports that clearly show this. The company is well-positioned, with its zero-trust architecture, to lead the way in securing agentic workflows. If the numbers it reports tomorrow, along with its forward guidance and management commentary, indicate that the company is gaining traction in the agentic AI cybersecurity push, the stock could react very positively.
I've been a stock investor for more than 20 years, and have owned dozens of technology stocks throughout that time. But I've never owned a pure-play cybersecurity company before.
That changed recently when I opened a position in Zscaler (ZS +2.25%) a couple of weeks ago. The stock fell sharply over the past year on AI disruption concerns, and even after a rebound, it sits around 45% below its 52-week high.
To put it mildly, I think the market has this one wrong. Here's why.
Image source: Getty Images.
Zscaler: The 30-second version If you aren't familiar with what Zscaler does, it operates a "zero trust" platform that helps companies secure access to apps and data. All traffic from remote workers, cloud-based apps, or internal systems is funneled through Zscaler's cloud, which inspects it to ensure access is allowed. Think of it as a checkpoint that employees must pass through to access what they need.
One common misconception is that Zscaler competes with fellow cloud-based cybersecurity company CrowdStrike (CRWD +5.77%). But CrowdStrike solves a different problem. It monitors activity on PCs, servers, and cloud-based apps to detect and shut down malicious activity. In simple terms, Zscaler secures network traffic, while CrowdStrike secures devices. Plenty of companies run both.
Why the market has Zscaler wrong Widespread adoption of AI expands the potential for cyberattacks in a few ways, some of which could be massive tailwinds for Zscaler.
Consider this. Bots, AI agents, and other non-human sources recently surpassed 50% of all internet traffic for the first time. But some industry experts believe this could be just the beginning. Cloudflare's (NET +1.76%) CEO recently said that non-human traffic could be 1,000 times greater than human traffic within five years.
Every AI agent, service account, and API integration is a new identity that can be compromised. If agentic AI traffic grows exponentially over the next few years, Zscaler (which gets paid based on traffic and users flowing through its cloud) could be a massive beneficiary.
In the most recent quarter, Zscaler's annual recurring revenue grew 25% year-over-year, but with agentic AI traffic ramping up, this could accelerate further. The business has strong margins (16% free cash flow margin), and management has done a great job of building out AI tools and making bolt-on acquisitions to prepare for the opportunity.
Of course, there are significant risk factors. Zscaler has significant competition from companies including Palo Alto Networks (PANW +2.84%) and Microsoft (MSFT -1.22%). And, at 42 times forward earnings, it isn't exactly a cheap stock. But Zscaler sits directly between applications and users, which is a solid place to be as thousands of new non-human users begin to access the enterprise's systems.
Matt Frankel, CFP® has positions in Zscaler. The Motley Fool has positions in and recommends Cloudflare, CrowdStrike, Microsoft, and Zscaler. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.
Zscaler (ZS - Free Report) closed the most recent trading day at $170.31, moving +1.12% from the previous trading session. The stock outpaced the S&P 500's daily loss of 0.02%. Meanwhile, the Dow lost 0.21%, and the Nasdaq, a tech-heavy index, lost 0.08%.
Shares of the cloud-based information security provider witnessed a gain of 11.07% over the previous month, beating the performance of the Computer and Technology sector with its gain of 4.99%, and the S&P 500's gain of 3.67%.
The investment community will be paying close attention to the earnings performance of Zscaler in its upcoming release. The company is slated to reveal its earnings on September 3, 2026. The company is expected to report EPS of $1.09, up 22.47% from the prior-year quarter. Alongside, our most recent consensus estimate is anticipating revenue of $877.19 million, indicating a 21.96% upward movement from the same quarter last year.
Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $4.14 per share and revenue of $3.33 billion. These totals would mark changes of +26.22% and +24.61%, respectively, from last year.
Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Zscaler. These recent revisions tend to reflect the evolving nature of short-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.
Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.
The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 17.08% lower. Zscaler is holding a Zacks Rank of #4 (Sell) right now.
Looking at its valuation, Zscaler is holding a Forward P/E ratio of 37.34. This denotes a discount relative to the industry average Forward P/E of 45.13.
It is also worth noting that ZS currently has a PEG ratio of 2.79. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. ZS's industry had an average PEG ratio of 2.79 as of yesterday's close.
The Security industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 28, this industry ranks in the top 12% of all industries, numbering over 250.
The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
You can find more information on all of these metrics, and much more, on Zacks.com.
Bank of New York Mellon Corp bought a new position in shares of Zscaler, Inc. (NASDAQ:ZS – Free Report) during the second quarter, according to its most recent filing with the SEC. The fund bought 470,467 shares of the company’s stock, valued at approximately $66,406,000. Bank of New York Mellon Corp owned 0.29% of Zscaler at the end of the most recent reporting period.
Several other institutional investors also recently added to or reduced their stakes in the stock. Binnacle Investments Inc purchased a new position in Zscaler in the third quarter valued at about $25,000. AlphaCentric Advisors LLC bought a new position in shares of Zscaler during the 4th quarter valued at approximately $29,000. University of Texas Texas AM Investment Management Co. purchased a new stake in shares of Zscaler during the 4th quarter worth approximately $30,000. Mcguire Capital Advisors Inc. purchased a new stake in shares of Zscaler during the 4th quarter worth approximately $32,000. Finally, Western Wealth Management LLC bought a new stake in shares of Zscaler in the 1st quarter worth approximately $33,000. Institutional investors own 46.45% of the company’s stock.
Zscaler Stock Performance NASDAQ ZS opened at $170.31 on Thursday. The company’s 50 day simple moving average is $153.75 and its two-hundred day simple moving average is $149.99. The company has a debt-to-equity ratio of 0.72, a current ratio of 1.86 and a quick ratio of 1.86. Zscaler, Inc. has a 1 year low of $114.63 and a 1 year high of $336.99. The stock has a market capitalization of $27.54 billion, a PE ratio of -354.81, a P/E/G ratio of 99.13 and a beta of 0.94.
Zscaler (NASDAQ:ZS – Get Free Report) last released its quarterly earnings results on Tuesday, May 26th. The company reported $1.08 EPS for the quarter, beating analysts’ consensus estimates of $1.01 by $0.07. Zscaler had a negative net margin of 2.44% and a negative return on equity of 0.37%. The firm had revenue of $850.48 million during the quarter, compared to analyst estimates of $835.14 million. During the same period in the previous year, the business earned $0.84 EPS. The business’s revenue for the quarter was up 25.4% on a year-over-year basis. Analysts predict that Zscaler, Inc. will post 0.13 earnings per share for the current fiscal year. Insiders Place Their Bets In other news, CEO Jagtar Singh Chaudhry sold 2,878 shares of Zscaler stock in a transaction dated Tuesday, June 16th. The stock was sold at an average price of $126.43, for a total transaction of $363,865.54. Following the completion of the sale, the chief executive officer owned 343,038 shares in the company, valued at approximately $43,370,294.34. This trade represents a 0.83% decrease in their position. The sale was disclosed in a legal filing with the SEC, which can be accessed through this link. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CFO Kevin Rubin sold 3,000 shares of the business’s stock in a transaction dated Thursday, June 25th. The stock was sold at an average price of $124.22, for a total value of $372,660.00. Following the transaction, the chief financial officer directly owned 41,901 shares of the company’s stock, valued at $5,204,942.22. The trade was a 6.68% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold 16,772 shares of company stock valued at $2,139,799 over the last 90 days. 17.20% of the stock is owned by insiders.
Wall Street Analyst Weigh In Several equities analysts have weighed in on the company. TD Cowen increased their price objective on Zscaler from $180.00 to $200.00 and gave the company a “buy” rating in a report on Monday, August 17th. Royal Bank Of Canada restated an “outperform” rating and issued a $200.00 target price on shares of Zscaler in a research note on Wednesday, June 10th. Guggenheim reaffirmed a “buy” rating and set a $214.00 price target on shares of Zscaler in a research report on Monday. Truist Financial set a $210.00 price target on Zscaler in a research note on Wednesday, May 27th. Finally, Needham & Company LLC reissued a “buy” rating and issued a $180.00 price objective on shares of Zscaler in a report on Wednesday, June 10th. Thirty-four analysts have rated the stock with a Buy rating, six have assigned a Hold rating and one has issued a Sell rating to the stock. According to data from MarketBeat.com, Zscaler currently has an average rating of “Moderate Buy” and an average price target of $216.18.
Read Our Latest Report on Zscaler
Zscaler News Roundup Here are the key news stories impacting Zscaler this week:
Positive Sentiment: JPMorgan raised its price target on Zscaler from $205 to $215 and maintained an “overweight” rating, implying substantial upside from recent trading levels. Benzinga report Positive Sentiment: Zscaler participated in Deep Cogito’s $43 million Series A financing. The investment gives Zscaler exposure to a startup developing reinforcement-learning and self-improving AI models, potentially supporting the company’s broader AI and cybersecurity strategy. Deep Cogito funding announcement Positive Sentiment: Guggenheim reaffirmed its “Buy” rating, adding another supportive analyst opinion as investors assess Zscaler’s growth prospects. Guggenheim rating report Neutral Sentiment: Analyst sentiment is mixed ahead of earnings. Reports highlight strong AI-driven expectations across cybersecurity stocks, increasing the potential for volatility if Zscaler’s fiscal fourth-quarter results or outlook fall short. Cybersecurity stocks earnings report Negative Sentiment: Evercore added Zscaler to its tactical underperform list ahead of the fiscal fourth-quarter report, signaling concern that the stock’s valuation and elevated expectations may limit near-term upside. Evercore tactical underperform report Negative Sentiment: CFO Kevin Rubin sold 503 shares worth approximately $87,210 under a pre-arranged Rule 10b5-1 trading plan. The transaction was small relative to his remaining holdings and appears more routine than an indication of changing company fundamentals, but it can still attract modest selling scrutiny. SEC insider trading filing Zscaler Company Profile (Free Report)
Zscaler is a cloud security company that delivers a cloud-native platform to protect users, applications and data as organizations move away from traditional, network-centric security architectures. The company focuses on a zero trust approach that assumes no implicit trust for users or devices, providing secure access to the internet, SaaS applications and private applications regardless of where users are located. Zscaler positions its services as an alternative to legacy appliances and site-centric VPNs, aiming to simplify security while enabling modern, distributed workforces.
Key offerings are built around the Zscaler Zero Trust Exchange, a multi-tenant cloud platform that enforces security and access policies in-line.
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Algert Global LLC boosted its holdings in Zscaler, Inc. (NASDAQ:ZS – Free Report) by 711.5% during the second quarter, according to the company in its most recent Form 13F filing with the Securities & Exchange Commission. The firm owned 42,119 shares of the company’s stock after acquiring an additional 36,929 shares during the quarter. Algert Global LLC’s holdings in Zscaler were worth $5,945,000 at the end of the most recent quarter.
Other hedge funds have also recently added to or reduced their stakes in the company. Ally Financial Inc. bought a new position in Zscaler during the second quarter worth about $1,129,000. Portland Investment Counsel Inc. bought a new stake in shares of Zscaler in the 2nd quarter valued at approximately $237,000. Cibc World Market Inc. bought a new stake in shares of Zscaler in the 2nd quarter valued at approximately $1,546,000. OMERS ADMINISTRATION Corp acquired a new position in shares of Zscaler in the 2nd quarter worth approximately $763,000. Finally, Osmosis Investment Management UK Ltd acquired a new position in shares of Zscaler in the 2nd quarter worth approximately $245,000. Institutional investors and hedge funds own 46.45% of the company’s stock.
Insiders Place Their Bets In related news, CEO Jagtar Singh Chaudhry sold 2,878 shares of the company’s stock in a transaction dated Tuesday, June 16th. The shares were sold at an average price of $126.43, for a total transaction of $363,865.54. Following the transaction, the chief executive officer owned 343,038 shares in the company, valued at $43,370,294.34. This represents a 0.83% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which is available at the SEC website. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, insider Adam Geller sold 2,817 shares of the stock in a transaction dated Monday, June 22nd. The stock was sold at an average price of $122.60, for a total transaction of $345,364.20. Following the sale, the insider directly owned 42,314 shares in the company, valued at approximately $5,187,696.40. This represents a 6.24% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last ninety days, insiders sold 16,772 shares of company stock valued at $2,139,799. 17.20% of the stock is owned by corporate insiders.
Zscaler Price Performance Zscaler stock opened at $187.30 on Friday. The company has a debt-to-equity ratio of 0.72, a quick ratio of 1.86 and a current ratio of 1.86. The firm has a market cap of $30.29 billion, a P/E ratio of -390.20, a P/E/G ratio of 100.24 and a beta of 0.94. The business’s fifty day moving average is $155.00 and its two-hundred day moving average is $150.13. Zscaler, Inc. has a 52 week low of $114.63 and a 52 week high of $336.99. Zscaler (NASDAQ:ZS – Get Free Report) last announced its earnings results on Tuesday, May 26th. The company reported $1.08 EPS for the quarter, topping the consensus estimate of $1.01 by $0.07. Zscaler had a negative return on equity of 0.37% and a negative net margin of 2.44%.The company had revenue of $850.48 million for the quarter, compared to analysts’ expectations of $835.14 million. During the same quarter in the prior year, the business earned $0.84 earnings per share. The business’s revenue for the quarter was up 25.4% on a year-over-year basis. Equities research analysts forecast that Zscaler, Inc. will post 0.13 earnings per share for the current fiscal year.
Zscaler News Roundup Here are the key news stories impacting Zscaler this week:
Positive Sentiment: A broad cybersecurity-sector re-rating lifted Zscaler and other previously underperforming security stocks. The First Trust NASDAQ Cybersecurity ETF also advanced strongly, suggesting investors are buying the group rather than focusing only on ZS. Cybersecurity sector re-rating Positive Sentiment: J.P. Morgan assigned Zscaler a “buy” or “overweight” view and raised its price target from $205 to $215. The higher target reinforces expectations for additional upside and was a direct bullish catalyst. J.P. Morgan upgrades Zscaler Positive Sentiment: Zscaler participated in Deep Cogito’s $43 million Series A financing. The investment provides exposure to a developer of self-improving AI models and supports Zscaler’s broader enterprise-AI positioning, although it is unlikely to materially affect near-term earnings. Deep Cogito financing Neutral Sentiment: Investors are awaiting Zscaler’s quarterly earnings announcement. The company previously exceeded consensus estimates for earnings and revenue, but the upcoming report must validate expectations for continued growth in cloud security and AI-related demand. Zscaler earnings announcement Negative Sentiment: Evercore placed Zscaler on its tactical “underperform” list ahead of results, indicating that valuation and elevated growth expectations could create downside risk if the earnings outlook disappoints. Evercore underperform view Negative Sentiment: CFO Kevin Rubin sold 503 shares worth approximately $87,210 under a pre-arranged Rule 10b5-1 plan. The sale reduced his holdings by about 1.2% and is a modest negative signal, though the planned nature and small size limit its significance. Zscaler CFO stock sale Wall Street Analyst Weigh In Several analysts recently commented on the company. Weiss Ratings reaffirmed a “sell (e+)” rating on shares of Zscaler in a research note on Tuesday, June 9th. Deutsche Bank Aktiengesellschaft dropped their price objective on Zscaler from $185.00 to $175.00 and set a “buy” rating for the company in a research note on Wednesday, May 27th. Guggenheim reissued a “buy” rating and set a $214.00 price objective on shares of Zscaler in a report on Monday. TD Cowen boosted their target price on shares of Zscaler from $180.00 to $200.00 and gave the company a “buy” rating in a research note on Monday, August 17th. Finally, KeyCorp upped their target price on shares of Zscaler from $185.00 to $210.00 and gave the stock an “overweight” rating in a report on Friday, August 21st. Thirty-four analysts have rated the stock with a Buy rating, six have issued a Hold rating and one has given a Sell rating to the company. According to MarketBeat, the company currently has an average rating of “Moderate Buy” and an average price target of $216.18.
Check Out Our Latest Report on Zscaler
About Zscaler (Free Report)
Zscaler is a cloud security company that delivers a cloud-native platform to protect users, applications and data as organizations move away from traditional, network-centric security architectures. The company focuses on a zero trust approach that assumes no implicit trust for users or devices, providing secure access to the internet, SaaS applications and private applications regardless of where users are located. Zscaler positions its services as an alternative to legacy appliances and site-centric VPNs, aiming to simplify security while enabling modern, distributed workforces.
Key offerings are built around the Zscaler Zero Trust Exchange, a multi-tenant cloud platform that enforces security and access policies in-line.
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Přestože je hlavní výsledková sezóna za námi, i tento týden nabídne řadu zajímavých reportů. Tuzemští investoři se zaměří na pololetní čísla Kofoly. Z indexu S&P 500 by podle Bloombergu tento týden mělo zveřejnit své výsledky 10 společností. Nejsledovanější bude středeční report výrobce čipů Broadcom. O rozmachu AI mohou napovědět také výsledky společností Dell či HPE. Pozornost si zaslouží i série reportů softwarových firem v čele s Palo Alto Networks, Snowflake a MongoDB.
Přehled vybraných společností reportujících své výsledky v tomto týdnu (zdroj: síť X - Earnings Whispers)
Pondělí (31. srpna) ČR (před trhem): Primoco
Úterý (1. září) USA (před trhem): Medtronic
USA (po trhu): Palo Alto Networks, Dell Technologies, MongoDB, GitLab
Středa (2. září) USA (před trhem): Brown-Forman
USA (po trhu): Broadcom, Snowflake, Hewlett Packard Enterprise, NetApp
Čtvrtek (3. září) ČR (po trhu): Kofola
USA (před trhem): Ciena, Campbell‘s
USA (po trhu): Lululemon Athletica, Zscaler, Docusign
Pátek (4. září) USA (před trhem): Copart (nepotvrzeno, odhad Bloombergu)
Jako každé čtvrtletí jsme pro vás připravili podrobný kalendář pro ČR, USA a eurozónu.
Zscaler (NASDAQ: ZS - Get Free Report) and Santo Mining (OTCMKTS:SANP - Get Free Report) are both technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, institutional ownership, profitability and earnings. Insider and Institutional Ownership 46.5% of Zscaler shares are
Bank of Nova Scotia bought a new stake in Zscaler, Inc. (NASDAQ:ZS – Free Report) during the 2nd quarter, according to the company in its most recent disclosure with the Securities and Exchange Commission. The firm bought 253,500 shares of the company’s stock, valued at approximately $35,782,000. Bank of Nova Scotia owned about 0.16% of Zscaler at the end of the most recent quarter.
Several other institutional investors also recently modified their holdings of ZS. Vanguard Group Inc. lifted its stake in shares of Zscaler by 0.5% in the 4th quarter. Vanguard Group Inc. now owns 11,423,424 shares of the company’s stock valued at $2,569,357,000 after purchasing an additional 55,521 shares during the period. BlackRock Inc. acquired a new stake in shares of Zscaler during the second quarter worth $1,396,028,000. First Trust Advisors LP increased its holdings in Zscaler by 36.2% in the first quarter. First Trust Advisors LP now owns 3,518,678 shares of the company’s stock valued at $493,635,000 after purchasing an additional 935,781 shares during the last quarter. Price T Rowe Associates Inc. MD increased its holdings in Zscaler by 43.3% in the fourth quarter. Price T Rowe Associates Inc. MD now owns 2,572,358 shares of the company’s stock valued at $578,576,000 after purchasing an additional 777,414 shares during the last quarter. Finally, State Street Corp lifted its stake in Zscaler by 3.4% in the fourth quarter. State Street Corp now owns 2,337,604 shares of the company’s stock valued at $525,774,000 after buying an additional 77,800 shares during the period. Institutional investors and hedge funds own 46.45% of the company’s stock.
Zscaler Stock Performance Shares of Zscaler stock opened at $181.74 on Monday. The company has a debt-to-equity ratio of 0.72, a current ratio of 1.86 and a quick ratio of 1.86. The firm has a market cap of $29.39 billion, a price-to-earnings ratio of -378.62, a price-to-earnings-growth ratio of 106.97 and a beta of 0.94. The stock’s 50-day moving average is $151.10 and its 200-day moving average is $150.19. Zscaler, Inc. has a one year low of $114.63 and a one year high of $336.99.
Zscaler (NASDAQ:ZS – Get Free Report) last posted its quarterly earnings data on Tuesday, May 26th. The company reported $1.08 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $1.01 by $0.07. The company had revenue of $850.48 million for the quarter, compared to the consensus estimate of $835.14 million. Zscaler had a negative net margin of 2.44% and a negative return on equity of 0.37%. The firm’s revenue was up 25.4% compared to the same quarter last year. During the same period last year, the company earned $0.84 earnings per share. Zscaler has set its Q4 2026 guidance at 1.080-1.090 EPS and its FY 2026 guidance at 4.100-4.110 EPS. Equities analysts predict that Zscaler, Inc. will post 0.13 earnings per share for the current fiscal year. Zscaler News Summary Here are the key news stories impacting Zscaler this week:
Positive Sentiment: KeyBanc raised its price target to $210 from a lower prior target, citing what it views as a valuation discount and potential for the cybersecurity company to regain investor confidence. KeyBanc upgrades Zscaler price target Positive Sentiment: Additional bullish analyst actions supported the stock. Mizuho lifted its price target to $210, Stifel Nicolaus raised its target to $200, and Cantor Fitzgerald assigned Zscaler an “Overweight” rating. The actions suggest Wall Street sees upside despite the stock’s sharp decline from its 52-week high. Mizuho raises Zscaler price target Stifel raises Zscaler price target Cantor Fitzgerald rates Zscaler Overweight Positive Sentiment: Rising AI-driven cyber threats reinforce demand for Zscaler’s platform. NTT DATA CEO Abhijit Dubey said frontier AI is making attacks more sophisticated, expanding the attack surface, and accelerating attacks to machine speed—an industry trend that could increase demand for cloud-based zero-trust security. AI and cybersecurity threats Positive Sentiment: Zscaler’s expanded Carahsoft partnership targets U.S. small and midsize businesses with standardized bundles, simpler pricing, and broader partner enablement. The initiative could diversify Zscaler’s customer base and create an additional growth channel beyond large enterprises. Zscaler and Carahsoft SMB partnership Negative Sentiment: AI-lab IPO speculation remains a risk to sentiment. Reports that Anthropic may pursue a massive public offering renewed concerns that investors could redirect capital from enterprise software stocks toward AI companies, contributing to recent pressure on Zscaler. Zscaler and AI IPO concerns Analyst Upgrades and Downgrades A number of equities analysts have issued reports on ZS shares. Wells Fargo & Company raised their target price on Zscaler from $180.00 to $210.00 and gave the stock an “overweight” rating in a report on Monday, August 17th. Stifel Nicolaus increased their price target on shares of Zscaler from $175.00 to $200.00 and gave the company a “buy” rating in a research report on Wednesday, August 19th. The Goldman Sachs Group reissued a “neutral” rating and set a $179.00 price objective on shares of Zscaler in a research note on Wednesday, May 27th. Citigroup restated a “market outperform” rating on shares of Zscaler in a report on Wednesday, May 27th. Finally, Morgan Stanley lowered their target price on shares of Zscaler from $155.00 to $145.00 and set an “equal weight” rating for the company in a research note on Wednesday, May 27th. Thirty-four equities research analysts have rated the stock with a Buy rating, six have given a Hold rating and one has issued a Sell rating to the company. Based on data from MarketBeat, the company currently has an average rating of “Moderate Buy” and an average target price of $215.36.
Read Our Latest Stock Report on ZS
Insider Buying and Selling In other news, CFO Kevin Rubin sold 503 shares of the business’s stock in a transaction dated Monday, July 27th. The shares were sold at an average price of $147.12, for a total transaction of $74,001.36. Following the transaction, the chief financial officer directly owned 41,398 shares in the company, valued at $6,090,473.76. The trade was a 1.20% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Adam Geller sold 2,817 shares of the business’s stock in a transaction dated Monday, June 22nd. The stock was sold at an average price of $122.60, for a total transaction of $345,364.20. Following the transaction, the insider owned 42,314 shares in the company, valued at $5,187,696.40. This represents a 6.24% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last 90 days, insiders sold 16,269 shares of company stock worth $2,052,589. 17.20% of the stock is owned by corporate insiders.
Zscaler Company Profile (Free Report)
Zscaler is a cloud security company that delivers a cloud-native platform to protect users, applications and data as organizations move away from traditional, network-centric security architectures. The company focuses on a zero trust approach that assumes no implicit trust for users or devices, providing secure access to the internet, SaaS applications and private applications regardless of where users are located. Zscaler positions its services as an alternative to legacy appliances and site-centric VPNs, aiming to simplify security while enabling modern, distributed workforces.
Key offerings are built around the Zscaler Zero Trust Exchange, a multi-tenant cloud platform that enforces security and access policies in-line.
Read More Five stocks we like better than Zscaler VIG, VYM, and VYMI: Which Vanguard Dividend ETF Is Right for You? 3 Closed-End Funds to Maximize Dividend Payments Rocket Lab’s Sell-Off Is Fading—Is It Finally Safe to Buy? $27 Billion in Buybacks: 3 Stocks Betting Their Strong Runs Aren’t Over Want to see what other hedge funds are holding ZS? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Zscaler, Inc. (NASDAQ:ZS – Free Report).
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In the latest close session, Zscaler (ZS - Free Report) was down 5.23% at $174.95. The stock fell short of the S&P 500, which registered a loss of 0.87% for the day. Elsewhere, the Dow saw a downswing of 1.32%, while the tech-heavy Nasdaq depreciated by 1%.
Shares of the cloud-based information security provider have appreciated by 29.76% over the course of the past month, outperforming the Computer and Technology sector's gain of 3.23%, and the S&P 500's gain of 3.48%.
The investment community will be paying close attention to the earnings performance of Zscaler in its upcoming release. The company is slated to reveal its earnings on September 3, 2026. The company is expected to report EPS of $1.09, up 22.47% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $877.19 million, up 21.96% from the year-ago period.
For the full year, the Zacks Consensus Estimates are projecting earnings of $4.14 per share and revenue of $3.33 billion, which would represent changes of +26.22% and +24.61%, respectively, from the prior year.
It's also important for investors to be aware of any recent modifications to analyst estimates for Zscaler. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.
Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.
The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.35% higher. At present, Zscaler boasts a Zacks Rank of #3 (Hold).
In terms of valuation, Zscaler is currently trading at a Forward P/E ratio of 40.31. Its industry sports an average Forward P/E of 44.89, so one might conclude that Zscaler is trading at a discount comparatively.
Investors should also note that ZS has a PEG ratio of 3.02 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Security stocks are, on average, holding a PEG ratio of 3.02 based on yesterday's closing prices.
The Security industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 24, placing it within the top 10% of over 250 industries.
The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
You can find more information on all of these metrics, and much more, on Zacks.com.
Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?
Let's take a look at what these Wall Street heavyweights have to say about Zscaler (ZS - Free Report) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.
Zscaler currently has an average brokerage recommendation (ABR) of 1.44, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 45 brokerage firms. An ABR of 1.44 approximates between Strong Buy and Buy.
Of the 45 recommendations that derive the current ABR, 34 are Strong Buy and two are Buy. Strong Buy and Buy respectively account for 75.6% and 4.4% of all recommendations.
Brokerage Recommendation Trends for ZS
Check price target & stock forecast for Zscaler here>>>
While the ABR calls for buying Zscaler, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.
Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.
In other words, their interests aren't always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock's price movement.
Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock's price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.
ABR Should Not Be Confused With Zacks RankAlthough both Zacks Rank and ABR are displayed in a range of 1--5, they are different measures altogether.
Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.
Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide.
In contrast, the Zacks Rank is driven by earnings estimate revisions. And near-term stock price movements are strongly correlated with trends in earnings estimate revisions, according to empirical research.
Furthermore, the different grades of the Zacks Rank are applied proportionately across all stocks for which brokerage analysts provide earnings estimates for the current year. In other words, at all times, this tool maintains a balance among the five ranks it assigns.
Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company's changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements.
Is ZS a Good Investment?In terms of earnings estimate revisions for Zscaler, the Zacks Consensus Estimate for the current year has remained unchanged over the past month at $4.14.
Analysts' steady views regarding the company's earnings prospects, as indicated by an unchanged consensus estimate, could be a legitimate reason for the stock to perform in line with the broader market in the near term.
The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Zscaler. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
It may therefore be prudent to be a little cautious with the Buy-equivalent ABR for Zscaler.
