Zscaler (NASDAQ:ZS) Releases Earnings Results, Beats Expectations By $0.10 EPS

Zscaler (NASDAQ:ZS) issued its quarterly earnings data on Thursday. The company reported $1.19 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $1.09 by $0.10, Briefing.com reports. The firm had revenue of $898.19 million during the quarter, compared to the consensus estimate of $876.96 million. Zscaler had a negative net margin of 1.88% and a positive return on equity of 1.29%. The company’s revenue for the quarter was up 24.9% compared to the same quarter last year. During the same quarter in the previous year, the firm posted $0.89 EPS. Zscaler updated its FY 2027 guidance to 4.860-4.900 EPS and its Q1 2027 guidance to 1.150-1.160 EPS.

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

• Zscaler reported a strong fiscal 2026 finish, with revenue and ARR each up 25%, net new ARR up 24%, and a record 24.3% non-GAAP operating margin. Excluding Red Canary, Q4 net new ARR growth accelerated to 17% year over year.
• AI security is emerging as a major growth driver: Security for AI bookings rose more than 50% sequentially, its pipeline increased 75%, and 70% of those deals included data security. Zscaler also cited multiple seven-figure wins and expects its Agentic SecOps offering to begin contributing in the second half of fiscal 2027.
• Platform expansion is broadening the growth engine beyond user-based products. Non-seat-based offerings represented approximately 30% of new and upsell ACV in Q4 and fiscal 2026, while Zero Trust Everywhere customers increased to more than 950 from over 700 in the prior quarter.
• Fiscal 2027 guidance implies a notable growth slowdown, with ARR and revenue growth expected at approximately 17%, versus 25% growth in fiscal 2026. Management attributed the conservative outlook partly to sales-leadership transitions and the time required for the integrated SecOps offering to ramp.
• Red Canary experienced elevated, traditionally higher MDR churn during fiscal 2026, and management expects continued higher churn on renewals while forecasting no net new ARR contribution from the business in fiscal 2027. Capital expenditures are also expected to remain elevated due to higher prices for memory, storage, and processors, while a workforce restructuring affecting about 3% of employees will incur $30 million to $33 million in charges.

Zscaler Trading Down 4.5%

Shares of ZS stock opened at $169.80 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 stock has a fifty day simple moving average of $161.26 and a two-hundred day simple moving average of $150.53. The firm has a market capitalization of $27.46 billion, a PE ratio of -435.38, a PEG ratio of 104.65 and a beta of 0.95. Zscaler has a 52-week low of $114.63 and a 52-week high of $336.99.

Insiders Place Their Bets

In other news, insider Adam Geller sold 2,817 shares of the company’s stock in a transaction dated Monday, June 22nd. The stock was sold at an average price of $122.60, for a total value of $345,364.20. Following the completion of the transaction, the insider owned 42,314 shares of the company’s stock, valued at $5,187,696.40. This represents a 6.24% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which is available at this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Jagtar Chaudhry sold 2,878 shares of the company’s stock in a transaction dated Tuesday, June 16th. The stock was sold at an average price of $126.43, for a total value of $363,865.54. Following the completion of the transaction, the chief executive officer directly owned 343,038 shares of the company’s stock, valued at approximately $43,370,294.34. This trade represents a 0.83% decrease in their position. The disclosure for this sale is available in the SEC filing. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Insiders have sold 16,772 shares of company stock valued at $2,139,799 over the last three months. Insiders own 17.20% of the company’s stock.

Institutional Investors Weigh In On Zscaler

Institutional investors and hedge funds have recently modified their holdings of the stock. Binnacle Investments Inc bought a new position in Zscaler during the third quarter valued at approximately $25,000. AlphaCentric Advisors LLC purchased a new stake in shares of Zscaler in the fourth quarter valued at $29,000. Mcguire Capital Advisors Inc. purchased a new stake in Zscaler in the 4th quarter worth about $32,000. Strive Financial Group LLC bought a new stake in shares of Zscaler during the 4th quarter worth approximately $39,000. Finally, Sumitomo Mitsui Financial Group Inc. boosted its stake in shares of Zscaler by 105.5% during the fourth quarter. Sumitomo Mitsui Financial Group Inc. now owns 215 shares of the company’s stock valued at $49,000 after purchasing an additional 4,111 shares during the period. Institutional investors own 46.45% of the company’s stock.

Key Headlines Impacting Zscaler

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: Strong fiscal fourth-quarter results: Zscaler reported adjusted EPS of $1.19 versus the $1.09 consensus and revenue of $898.2 million versus $877.0 million expected. Revenue and annual recurring revenue (ARR) each increased 25% year over year, while non-GAAP operating margin reached a record 24%. Zscaler Announces Strong Fourth Quarter and Fiscal 2026 Financial Results
• Positive Sentiment: AI and platform demand remain catalysts: Management highlighted growing demand for Security for AI, Agentic SecOps, non-seat-based products and large enterprise deals. Analysts including Baird, Stephens, Needham, Canaccord and Cantor raised price targets, generally citing the earnings beat and potential for conservative guidance to be exceeded. Zscaler Analysts Boost Their Forecasts After Better-Than-Expected Q4 Earnings
• Neutral Sentiment: Analyst opinion is divided: Some analysts called the fiscal 2027 outlook overly cautious and maintained bullish ratings, while others noted that the forecast reflects competitive pressure, the Red Canary acquisition and a more measured growth profile.
• Negative Sentiment: Fiscal 2027 growth is expected to decelerate: Zscaler guided for revenue growth of 16.6% to 17.5% and ARR growth of 16.6% to 17.4%, well below the 25% growth delivered in fiscal 2026. The slower outlook overshadowed the quarterly beat and renewed valuation concerns for high-growth cybersecurity stocks. Zscaler Fiscal 2027 Growth Forecast
• Negative Sentiment: Free cash flow weakened sharply: Fourth-quarter free cash flow fell 65% year over year to $60.8 million, versus approximately $66.9 million expected, as capital expenditures and internal-use software spending increased. Zscaler also announced a restructuring affecting about 3% of its workforce, adding execution concerns. Zscaler Shares Fall Despite Earnings Beat

Analyst Ratings Changes

Several equities analysts recently weighed in on ZS shares. Mizuho lifted their target price on Zscaler from $185.00 to $210.00 and gave the company an “outperform” rating in a research report on Wednesday, August 19th. FBN Securities reaffirmed an “outperform” rating and issued a $175.00 price objective on shares of Zscaler in a research note on Wednesday, May 27th. Wells Fargo & Company lifted their price objective on Zscaler from $210.00 to $215.00 and gave the company an “overweight” rating in a research report on Friday. Citigroup reiterated a “market outperform” rating on shares of Zscaler in a research note on Wednesday, May 27th. Finally, Stephens set a $215.00 target price on shares of Zscaler in a report on Friday. Thirty-four analysts have rated the stock with a Buy rating, six have issued a Hold rating and one has assigned a Sell rating to the company. Based on data from MarketBeat, Zscaler presently has a consensus rating of “Moderate Buy” and an average target price of $217.08.

About Zscaler

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.