Zscaler (NASDAQ:ZS – Get Free Report) posted its quarterly earnings results on Thursday. The company reported $1.01 earnings per share for the quarter, topping analysts’ consensus estimates of $0.89 by $0.12, FiscalAI reports. Zscaler had a negative net margin of 1.45% and a negative return on equity of 0.12%. The business had revenue of $815.75 million during the quarter, compared to analyst estimates of $798.92 million. During the same period in the prior year, the business posted $0.78 earnings per share. The company’s revenue was up 25.9% on a year-over-year basis. Zscaler updated its Q3 2026 guidance to 1.000-1.010 EPS and its FY 2026 guidance to 3.990-4.020 EPS.
Here are the key takeaways from Zscaler’s conference call:
- Zscaler delivered a strong quarter with $816 million revenue (+26% YoY), ARR of $3.4 billion (+25%), exceeded targets and raised full‑year guidance while improving operating profit and free cash flow margins.
- Management positions Zscaler as the “cybersecurity platform for the AI age,” citing nearly 1 trillion AI transactions processed in 2025, early traction for AI Protect and agentic solutions, and customer wins with large enterprises.
- “Zero Trust Everywhere” adoption accelerated to over 550 enterprises (from ~130 a year ago); non‑seat metered offerings now represent >25% of new ACV and ARR tied to those products grew >100% YoY, aided by strong Z‑Flex bookings and record large‑deal conversions.
- The Red Canary acquisition adds MDR and agentic SOC capabilities and management raised its ARR contribution, but warned of elevated churn at Red Canary and will report it separately, creating near‑term renewal/churn risk despite higher ARR guidance.
Zscaler Price Performance
ZS traded up $11.66 during trading hours on Thursday, hitting $167.36. The company’s stock had a trading volume of 6,325,279 shares, compared to its average volume of 2,852,680. The stock has a market cap of $26.69 billion, a price-to-earnings ratio of -643.67, a P/E/G ratio of 317.40 and a beta of 1.02. The business’s 50-day moving average price is $200.63 and its 200-day moving average price is $256.06. The company has a current ratio of 1.82, a quick ratio of 1.82 and a debt-to-equity ratio of 0.86. Zscaler has a 12 month low of $141.56 and a 12 month high of $336.99.
Analyst Upgrades and Downgrades
Key Stories Impacting Zscaler
Here are the key news stories impacting Zscaler this week:
- Positive Sentiment: Q2 adjusted earnings and revenue beat consensus — Zscaler reported adjusted EPS of $1.01 vs. $0.89 expected and revenue of $815.8M vs. about $799M consensus, showing 26% year‑over‑year revenue growth. Strong headline beats helped lift sentiment. Zscaler (ZS) Tops Q2 Earnings and Revenue Estimates
- Positive Sentiment: ARR, cash flow and ARR guidance were strong — Annual recurring revenue rose to $3,359M (+25% YoY); operating and free cash flow improved and the company raised fiscal‑year ARR growth guidance to ~24%, which supports longer‑term subscription growth expectations. Zscaler Announces Strong Second-Quarter Fiscal 2026 Results; Raises Fiscal 2026 ARR Guidance to 24%
- Positive Sentiment: AI security momentum — Analyst pieces highlight Zscaler’s growing AI‑security products (AI Guard, Agentic Operations) and a reported ~$400M AI Security ARR pillar, which could diversify/reaccelerate growth and improve monetization beyond seat‑based SaaS risk. Zscaler’s AI-Powered Security: A Compelling Case For Aggressive Growth Investors
- Neutral Sentiment: Mixed analyst activity — Some firms (e.g., Rosenblatt) reiterated bullish ratings while others (TD Cowen, BTIG) issued cautious or pessimistic notes recently; this leaves short‑term sentiment fragmented. Rosenblatt Securities Reiterates Buy Rating for Zscaler (NASDAQ:ZS)
- Negative Sentiment: After‑hours volatility tied to revenue outlook language — some outlets and traders flagged that commentary around fiscal‑year revenue/growth left room for concern, prompting an extended‑hours pullback despite the beat on EPS. ZScaler Stock Drops After Q2 Earnings, Lowered Revenue Guidance
- Negative Sentiment: GAAP loss and valuation/competition concerns remain — company reported a GAAP loss (and negative net margin/ROE), and commentary about competition and rich valuation continues to temper some investors’ enthusiasm. Zscaler faces earnings test as competition, valuation weigh
Insiders Place Their Bets
In other news, EVP Raj Judge sold 3,438 shares of the business’s stock in a transaction dated Tuesday, December 16th. The shares were sold at an average price of $230.82, for a total value of $793,559.16. Following the sale, the executive vice president directly owned 70,394 shares in the company, valued at $16,248,343.08. The trade was a 4.66% decrease in their position. The transaction was disclosed in a filing with the SEC, which is available at the SEC website. Also, insider Adam Geller sold 2,060 shares of the company’s stock in a transaction dated Tuesday, December 16th. The shares were sold at an average price of $230.82, for a total transaction of $475,489.20. Following the sale, the insider owned 52,148 shares in the company, valued at $12,036,801.36. This represents a 3.80% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Over the last ninety days, insiders sold 19,350 shares of company stock worth $4,471,509. Insiders own 17.20% of the company’s stock.
Institutional Investors Weigh In On Zscaler
Several institutional investors have recently modified their holdings of the stock. First Trust Advisors LP increased its position in shares of Zscaler by 15.9% during the 4th quarter. First Trust Advisors LP now owns 2,582,897 shares of the company’s stock valued at $580,945,000 after purchasing an additional 354,763 shares during the last quarter. Price T Rowe Associates Inc. MD boosted its stake in Zscaler by 43.3% during the fourth quarter. Price T Rowe Associates Inc. MD now owns 2,572,358 shares of the company’s stock worth $578,576,000 after buying an additional 777,414 shares during the period. State Street Corp increased its position in Zscaler by 3.4% during the fourth quarter. State Street Corp now owns 2,337,604 shares of the company’s stock valued at $525,774,000 after acquiring an additional 77,800 shares during the last quarter. AQR Capital Management LLC raised its stake in shares of Zscaler by 61.8% in the third quarter. AQR Capital Management LLC now owns 1,941,571 shares of the company’s stock valued at $576,083,000 after acquiring an additional 741,756 shares during the period. Finally, Morgan Stanley raised its stake in shares of Zscaler by 25.4% in the fourth quarter. Morgan Stanley now owns 1,557,640 shares of the company’s stock valued at $350,345,000 after acquiring an additional 315,498 shares during the period. 46.45% of the stock is owned by institutional investors.
Zscaler Company Profile
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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