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

Zscaler (NASDAQ:ZS) posted its earnings results 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. The company had revenue of $898.18 million for the quarter, compared to analyst estimates of $876.96 million. Zscaler had a negative return on equity of 0.37% and a negative net margin of 2.44%.The firm’s quarterly revenue was up 24.9% compared to the same quarter last year. During the same quarter in the previous year, the firm earned $0.89 earnings per share. 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 Stock Performance

ZS opened at $177.80 on Friday. The company has a market cap of $28.75 billion, a P/E ratio of -370.41, a price-to-earnings-growth ratio of 101.67 and a beta of 0.95. The company has a quick ratio of 1.86, a current ratio of 1.86 and a debt-to-equity ratio of 0.72. The firm’s 50-day moving average price is $160.51 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.

Wall Street Analysts Forecast Growth

A number of research analysts have recently issued reports on ZS shares. Robert W. Baird cut their price objective on shares of Zscaler from $265.00 to $230.00 and set an “outperform” rating on the stock in a research report on Wednesday, May 27th. FBN Securities reissued an “outperform” rating and set a $175.00 target price on shares of Zscaler in a research report on Wednesday, May 27th. Morgan Stanley lowered their target price on shares of Zscaler from $155.00 to $145.00 and set an “equal weight” rating for the company in a research note on Wednesday, May 27th. Rosenblatt Securities reaffirmed a “buy” rating and issued a $200.00 price target on shares of Zscaler in a report on Wednesday, June 10th. Finally, JPMorgan Chase & Co. upped their price target on Zscaler from $205.00 to $215.00 and gave the stock an “overweight” rating in a research report on Wednesday, August 26th. Thirty-four investment analysts have rated the stock with a Buy rating, six have assigned a Hold rating and one has assigned a Sell rating to the stock. According to MarketBeat, Zscaler has a consensus rating of “Moderate Buy” and an average price target of $213.10.

Insider Activity at Zscaler

In other Zscaler news, insider Robert Schlossman sold 3,146 shares of the business’s stock in a transaction that occurred on Tuesday, June 16th. The shares were sold at an average price of $126.43, for a total transaction of $397,748.78. Following the sale, the insider owned 69,366 shares of the company’s stock, valued at approximately $8,769,943.38. The trade was a 4.34% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CEO Jagtar Chaudhry sold 2,878 shares of Zscaler 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 sale, the chief executive officer directly owned 343,038 shares of the company’s stock, valued at approximately $43,370,294.34. This represents a 0.83% decrease in their position. 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. Insiders have sold 16,772 shares of company stock valued at $2,139,799 over the last 90 days. Company insiders own 17.20% of the company’s stock.

Institutional Inflows and Outflows

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

Trending Headlines about Zscaler

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: Zscaler reported fiscal Q4 revenue of $898.2 million, up 24.9% year over year and above the $877.0 million consensus estimate. Adjusted EPS of $1.19 also exceeded expectations of $1.09. Zscaler Q4 Earnings and Revenues Top Estimates
• Positive Sentiment: Annual recurring revenue increased 25% to $3.77 billion, while non-GAAP operating margin reached a record 24%. Management cited demand for AI-powered security, large deals, non-seat-based products and its Agentic SecOps offering as growth drivers. Zscaler stock soars on earnings beat, upbeat guidance
• Positive Sentiment: Fiscal Q1 2027 guidance was ahead of analyst expectations, with revenue of $935 million to $939 million and adjusted EPS of $1.15 to $1.16 versus consensus estimates of $925.5 million and $0.86, respectively. Full-year adjusted EPS guidance of $4.86 to $4.90 also exceeded the $3.70 consensus. Zscaler Announces Strong Fourth Quarter and Fiscal 2026 Financial Results
• Neutral Sentiment: Zscaler is restructuring and eliminating approximately 3% of its workforce to redirect resources toward AI and other strategic initiatives. The move could improve efficiency but introduces execution and morale risks. Zscaler forecasts FY2027 growth as it restructures
• Negative Sentiment: Fiscal 2027 revenue and ARR growth are expected to slow to roughly 17%, compared with 25% in fiscal 2026. Excluding the Red Canary acquisition, fiscal 2026 revenue growth was already 20%, intensifying concerns about deceleration. Zscaler Issued New Guidance
• Negative Sentiment: Despite strong adjusted profitability, Zscaler still posted a $3.4 million GAAP quarterly loss and a $63.2 million full-year loss. Fourth-quarter free-cash-flow margin fell to 7% from 24% because of substantially higher capital expenditures. Zscaler Loss Narrows As Revenue Soars

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.