Zscaler (NASDAQ:ZS) Releases Earnings Results

Zscaler (NASDAQ:ZS) issued its quarterly earnings data on Thursday. The company reported $1.19 earnings per share (EPS) for the quarter, beating the consensus estimate of $1.09 by $0.10, Briefing.com reports. Zscaler had a negative return on equity of 0.37% and a negative net margin of 2.44%.During the same period in the previous year, the firm posted $0.89 earnings per share. The company’s revenue was up 24.9% on a year-over-year basis. 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 Price Performance

NASDAQ:ZS traded up $5.07 during trading hours on Thursday, hitting $177.80. 8,161,736 shares of the stock were exchanged, compared to its average volume of 3,349,032. The firm’s fifty day moving average price is $159.43 and its 200 day moving average price is $150.39. Zscaler has a 52-week low of $114.63 and a 52-week high of $336.99. The company has a market cap of $28.75 billion, a P/E ratio of -370.41, a P/E/G ratio of 104.98 and a beta of 0.95. The company has a current ratio of 1.86, a quick ratio of 1.86 and a debt-to-equity ratio of 0.72.

Insider Transactions at Zscaler

In other news, insider Adam Geller sold 2,817 shares of Zscaler stock in a transaction that occurred on Monday, June 22nd. The stock was sold at an average price of $122.60, for a total value of $345,364.20. Following the sale, the insider directly owned 42,314 shares of the company’s stock, valued at $5,187,696.40. The trade was a 6.24% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the SEC, which is available at this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Robert Schlossman sold 3,146 shares of the business’s stock in a transaction that occurred on Tuesday, June 16th. The stock was sold at an average price of $126.43, for a total value of $397,748.78. Following the sale, the insider owned 69,366 shares of the company’s stock, valued at $8,769,943.38. The trade was a 4.34% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Over the last three months, insiders sold 16,772 shares of company stock valued at $2,139,799. Insiders own 17.20% of the company’s stock.

Institutional Investors Weigh In On Zscaler

Hedge funds have recently modified their holdings of the business. First Trust Advisors LP grew its stake in 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 acquiring an additional 354,763 shares in the last quarter. Price T Rowe Associates Inc. MD grew its position in shares of 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 in the last quarter. State Street Corp grew its position in shares of 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 purchasing an additional 77,800 shares in the last quarter. AQR Capital Management LLC increased its holdings 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 purchasing an additional 741,756 shares during the last quarter. Finally, Morgan Stanley lifted its position in Zscaler by 25.4% during the fourth quarter. Morgan Stanley now owns 1,557,640 shares of the company’s stock worth $350,345,000 after buying an additional 315,498 shares in the last quarter. 46.45% of the stock is currently owned by institutional investors and hedge funds.

More Zscaler News

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: Revenue and ARR beat expectations: Fiscal Q4 revenue rose 25% year over year to $898.2 million, exceeding the roughly $877 million consensus estimate. Annual recurring revenue also increased 25% to $3.77 billion, supported by strong large-deal activity, non-seat-based products and the Red Canary acquisition. Zscaler Announces Strong Fourth Quarter and Fiscal 2026 Financial Results
• Positive Sentiment: Adjusted earnings topped estimates: Non-GAAP earnings were $1.19 per diluted share, up from $0.89 a year earlier and above the $1.09 consensus. The company also reported a record 24% non-GAAP operating margin. The reported GAAP loss was $0.02 per share, which likely explains conflicting headlines citing a $0.14 EPS figure. Zscaler stock soars on earnings beat, upbeat guidance
• Positive Sentiment: Guidance exceeded expectations: Zscaler forecast first-quarter fiscal 2027 revenue of $935 million to $939 million, with adjusted EPS of $1.15 to $1.16. Full-year revenue guidance of $3.908 billion to $3.938 billion and ARR guidance of $4.396 billion to $4.426 billion point to continued growth, while management highlighted rising demand for AI and agentic-security tools. Zscaler beats sales expectations
• Positive Sentiment: Cybersecurity positioning remains favorable: Coverage of a Microsoft Exchange vulnerability highlighted Zscaler’s zero-trust platform as a potential tool for helping organizations reduce exposure to emerging threats. Microsoft Exchange Vulnerability and Zscaler
• Neutral Sentiment: Broader software shares also gained as Treasury yields pulled back and investors responded positively to recent technology-sector results, providing an additional tailwind for ZS. Software shares rise
• Negative Sentiment: Profitability and restructuring risks remain: Zscaler posted a $3.4 million GAAP net loss for Q4 and announced plans to eliminate approximately 3% of its workforce while reallocating resources toward AI and growth initiatives. Quarterly free-cash-flow margin fell to 7% from 24%, largely because of significantly higher capital expenditures and internal-use software spending. Zscaler Loss Narrows as Revenue Soars

Analyst Upgrades and Downgrades

A number of analysts recently issued reports on the stock. KeyCorp increased their price target on shares of Zscaler from $185.00 to $210.00 and gave the stock an “overweight” rating in a report on Friday, August 21st. Morgan Stanley lowered their target price on shares of Zscaler from $155.00 to $145.00 and set an “equal weight” rating on the stock in a research note on Wednesday, May 27th. Needham & Company LLC restated a “buy” rating and issued a $180.00 price target on shares of Zscaler in a research note on Wednesday, June 10th. Sanford C. Bernstein lowered their price target on Zscaler from $228.00 to $224.00 and set an “outperform” rating on the stock in a research report on Wednesday, May 27th. Finally, Robert W. Baird reduced their target price on Zscaler from $265.00 to $230.00 and set an “outperform” 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 assigned a Hold rating and one has given a Sell rating to the stock. Based on data from MarketBeat, Zscaler has an average rating of “Moderate Buy” and a consensus target price of $213.10.

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.