Zscaler (NASDAQ:ZS) Announces Quarterly Earnings Results

Zscaler (NASDAQ:ZS) released its quarterly earnings data on Tuesday. The company reported $1.08 earnings per share (EPS) for the quarter, beating the consensus estimate of $1.01 by $0.07, FiscalAI reports. Zscaler had a negative net margin of 2.44% and a negative return on equity of 0.39%. The company had revenue of $850.48 million during the quarter, compared to the consensus estimate of $835.14 million. During the same quarter in the prior year, the firm posted $0.84 earnings per share. Zscaler’s revenue for the quarter was up 25.4% on a year-over-year basis. Zscaler updated its Q4 2026 guidance to 1.080-1.090 EPS and its FY 2026 guidance to 4.100-4.110 EPS.

Here are the key takeaways from Zscaler’s conference call:

• Zscaler said Q3 was strong, with 25% ARR growth, revenue up 25% to $850 million, and non-GAAP operating margin reaching an all-time high of 23%.
• Management highlighted growing demand for its AI security offerings, with AI Protect bookings surpassing $100 million over the last 12 months and new customer wins tied to securing AI apps, agents, and sensitive data.
• The company said its platform continues to expand beyond users into Zero Trust Branch and Zero Trust Cloud, including large customer upsells and momentum in data security, which crossed $500 million ARR.
• Zscaler guided Q4 revenue to $875 million-$878 million and full-year fiscal 2026 revenue to about $3.33 billion, while flagging that two sales leaders departed and that management is being prudent about near-term guidance.
• The company lowered its free cash flow outlook because of rising data center and appliance costs, saying fiscal 2026 CapEx will be in the high single digits as a percentage of revenue, with fiscal 2027 potentially increasing by up to 200 basis points versus 2026.

Zscaler Price Performance

Shares of NASDAQ:ZS opened at $126.41 on Thursday. The company has a 50-day simple moving average of $145.21 and a 200-day simple moving average of $191.30. Zscaler has a one year low of $114.63 and a one year high of $336.99. The company has a debt-to-equity ratio of 0.78, a quick ratio of 1.90 and a current ratio of 1.90. The stock has a market capitalization of $20.33 billion, a price-to-earnings ratio of -263.35 and a beta of 0.96.

Wall Street Analyst Weigh In

Several research firms have issued reports on ZS. Evercore set a $155.00 price objective on shares of Zscaler and gave the company an “in-line” rating in a research note on Wednesday. Citigroup restated a “market outperform” rating on shares of Zscaler in a research note on Wednesday. FBN Securities reaffirmed an “outperform” rating and issued a $175.00 target price on shares of Zscaler in a report on Wednesday. Deutsche Bank Aktiengesellschaft reduced their target price on shares of Zscaler from $185.00 to $175.00 and set a “buy” rating for the company in a report on Wednesday. Finally, KeyCorp upped their target price on shares of Zscaler from $160.00 to $190.00 and gave the company an “overweight” rating in a report on Monday, May 18th. One research analyst has rated the stock with a Strong Buy rating, thirty-one have issued a Buy rating, seven have assigned a Hold rating and two have given a Sell rating to the stock. According to MarketBeat.com, the stock has an average rating of “Moderate Buy” and an average price target of $216.62.

Zscaler News Summary

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: Zscaler posted strong Q3 results, with EPS of $1.08 topping estimates and revenue of $850.5 million beating consensus, while revenue grew 25% year over year. The company also highlighted solid demand for its Zero Trust and AI security offerings, along with strong ARR growth. Zscaler Announces Strong Third-Quarter Fiscal 2026 Results
• Positive Sentiment: Several analysts kept bullish ratings even after trimming price targets, citing Zscaler’s strong net new recurring revenue and long-term positioning in cybersecurity. Zscaler collapses over outlook; analysts lower targets but remain upbeat on strong NRR
• Neutral Sentiment: Management said it is taking a “prudent” approach to guidance amid memory, storage, and processor cost pressures, plus sales team changes and departures of senior sales leaders. Zscaler Issues ‘Prudent’ Outlook Amid Memory Shortage, Sales Team Changes — Update
• Negative Sentiment: The main driver of the selloff was Zscaler’s fiscal Q4 revenue outlook of $875 million to $878 million, which came in slightly below expectations and raised concerns about slowing growth and tougher competition in cybersecurity. Zscaler sees downbeat quarterly revenue as competition heats up in cybersecurity market
• Negative Sentiment: Reports of leadership turnover in sales, along with investor investigations and fraud-related alerts, may add near-term uncertainty and pressure sentiment around the stock. Shareholder Alert: Ademi LLP Investigates Claims of Securities Fraud against Zscaler, Inc.

Insider Activity

In related news, EVP Raj Judge sold 2,488 shares of the stock in a transaction dated Tuesday, March 17th. The shares were sold at an average price of $156.59, for a total transaction of $389,595.92. Following the completion of the transaction, the executive vice president directly owned 67,906 shares of the company’s stock, valued at $10,633,400.54. This represents a 3.53% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is available at this link. Also, CFO Kevin Rubin sold 1,682 shares of the stock in a transaction dated Tuesday, March 17th. The stock was sold at an average price of $156.59, for a total transaction of $263,384.38. Following the transaction, the chief financial officer directly owned 46,479 shares of the company’s stock, valued at $7,278,146.61. This represents a 3.49% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. Insiders sold a total of 12,130 shares of company stock valued at $1,892,487 over the last ninety days. 17.20% of the stock is currently owned by company insiders.

Institutional Inflows and Outflows

Large investors have recently added to or reduced their stakes in the company. Binnacle Investments Inc purchased a new position in Zscaler during the third quarter worth about $25,000. AlphaCentric Advisors LLC purchased a new position in Zscaler during the fourth quarter worth about $29,000. Mcguire Capital Advisors Inc. purchased a new position in Zscaler during the fourth quarter worth about $32,000. Strive Financial Group LLC purchased a new position in Zscaler during the fourth quarter worth about $39,000. Finally, Sumitomo Mitsui Financial Group Inc. raised its holdings in Zscaler by 105.5% during the fourth quarter. Sumitomo Mitsui Financial Group Inc. now owns 215 shares of the company’s stock worth $49,000 after purchasing an additional 4,111 shares in the last quarter. 46.45% of the stock is owned by hedge funds and other 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.