Zscaler (NASDAQ:ZS) Issues Earnings Results

Zscaler (NASDAQ:ZS) issued its earnings results on Tuesday. The company reported $1.08 earnings per share for the quarter, beating analysts’ consensus estimates of $1.01 by $0.07, FiscalAI reports. The firm had revenue of $850.48 million for the quarter, compared to analyst estimates of $835.60 million. Zscaler had a negative net margin of 2.25% and a positive return on equity of 0.06%. The company’s quarterly revenue was up 25.4% on a year-over-year basis. During the same quarter last year, the business posted $0.84 earnings per share. 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 Stock Up 1.2%

Shares of NASDAQ ZS opened at $184.60 on Wednesday. The company has a market capitalization of $29.68 billion, a P/E ratio of -439.52 and a beta of 0.96. Zscaler has a 52-week low of $114.63 and a 52-week 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 company’s 50 day moving average price is $145.75 and its 200-day moving average price is $192.65.

Zscaler News Roundup

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: Zscaler reported fiscal Q3 revenue of $850.5 million, up 25% year over year, and EPS of $1.08, both ahead of estimates, showing continued execution and demand for its cloud security platform. Zscaler Announces Strong Third-Quarter Fiscal 2026 Results
• Positive Sentiment: The company raised full-year fiscal 2026 EPS guidance, signaling confidence in profitability despite ongoing investment in growth and AI security initiatives. ZS Q3 Earnings Call Flags Prudent Growth Outlook
• Positive Sentiment: B. Riley upgraded Zscaler to Buy from Neutral, citing product-line expansion and improving business momentum, though the firm lowered its price target. B.Riley Upgrades Zscaler (ZS) Rating to Buy Amid Product Line Expansion
• Neutral Sentiment: Zscaler continued to emphasize AI security as a growth driver, and commentary around record margins and recurring revenue suggests the long-term story remains intact. ZS Q3 Earnings Call Flags Prudent Growth Outlook
• Negative Sentiment: Investors reacted to weaker fourth-quarter revenue guidance and a lower free cash flow outlook, suggesting tougher near-term demand conditions and more cautious spending by customers. Zscaler sees downbeat quarterly revenue as competition heats up in cybersecurity market
• Negative Sentiment: Several reports noted that competition is heating up in cybersecurity, which is weighing on sentiment around Zscaler’s ability to sustain rapid growth and premium valuation. Zscaler tumbles as mixed guidance outshines strong Q3 results

Insider Activity at Zscaler

In other Zscaler news, insider Adam Geller sold 2,094 shares of the company’s stock in a transaction on Wednesday, March 18th. The shares were sold at an average price of $153.53, for a total transaction of $321,491.82. Following the sale, the insider owned 46,949 shares of the company’s stock, valued at approximately $7,208,079.97. This represents a 4.27% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the SEC, which can be accessed through this hyperlink. Also, Director James A. Beer sold 177 shares of the stock in a transaction dated Wednesday, March 18th. The stock was sold at an average price of $153.53, for a total value of $27,174.81. Following the sale, the director owned 4,384 shares of the company’s stock, valued at approximately $673,075.52. The trade was a 3.88% 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 90 days. 17.20% of the stock is owned by company insiders.

Institutional Inflows and Outflows

A number of hedge funds and other institutional investors have recently made changes to their positions in the business. Sunbelt Securities Inc. boosted its position in shares of Zscaler by 92.9% during the 4th quarter. Sunbelt Securities Inc. now owns 3,755 shares of the company’s stock valued at $845,000 after purchasing an additional 1,808 shares in the last quarter. Kovitz Investment Group Partners LLC increased its holdings in Zscaler by 618.0% in the fourth quarter. Kovitz Investment Group Partners LLC now owns 6,785 shares of the company’s stock worth $1,526,000 after purchasing an additional 5,840 shares in the last quarter. Mcguire Capital Advisors Inc. acquired a new position in Zscaler in the fourth quarter valued at approximately $32,000. Invesco Ltd. lifted its stake in Zscaler by 13.8% in the fourth quarter. Invesco Ltd. now owns 1,469,657 shares of the company’s stock valued at $330,555,000 after buying an additional 178,692 shares during the period. Finally, Corient Private Wealth LLC boosted its holdings in shares of Zscaler by 70.4% during the 4th quarter. Corient Private Wealth LLC now owns 53,981 shares of the company’s stock worth $12,141,000 after buying an additional 22,299 shares in the last quarter. 46.45% of the stock is owned by institutional investors and hedge funds.

Analysts Set New Price Targets

Several equities research analysts recently weighed in on the company. Piper Sandler raised Zscaler from a “neutral” rating to a “neutral” rating in a report on Monday, May 18th. BTIG Research reissued a “neutral” rating on shares of Zscaler in a research note on Thursday, April 9th. Morgan Stanley set a $145.00 price objective on Zscaler in a research note on Wednesday. Stephens dropped their price objective on shares of Zscaler from $340.00 to $225.00 and set an “overweight” rating for the company in a report on Monday, February 23rd. Finally, Mizuho set a $185.00 target price on shares of Zscaler in a research report on Wednesday. Two research analysts have rated the stock with a Strong Buy rating, twenty-eight have issued a Buy rating, eight have assigned a Hold rating and three have given a Sell rating to the company. According to data from MarketBeat.com, the stock presently has an average rating of “Moderate Buy” and a consensus target price of $259.11.

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.