Zscaler (ZS) has received quite a bit of attention from Zacks.com users lately. Therefore, it is wise to be aware of the facts that can impact the stock's prospects.
Zscaler, Inc. plunged 32% after Q3 earnings, despite beating consensus on both revenue and EPS, due to softer-than-expected revenue growth guidance for 2027 and higher AI CapEx. ZS posted robust Q3 results: $850.5M revenue (+25% Y/Y), 81% gross margin, $196M operating income (+33% Y/Y), and $136M free cash flow (+14% Y/Y). The ZS stock selloff was amplified by management guiding for a lower revenue growth rate of 16-17% in FY 2027 vs. market expectations of 19-20% growth.
Zscaler has been tapped as a favorite cybersecurity stock by some analysts, but investor optimism seems to have unraveled Wednesday after the company's outlook for revenue in the current quarter fell short of expectations.
ZS' Q3 beat on EPS and revenues as Zero Trust demand and larger enterprise deals lift ARR, RPO and prompt higher FY26 guidance.
Zscaler's NASDAQ: ZS stock price tanked by 30% following its fiscal Q3 earnings report and guidance update, opening a solid buy-the-dip opportunity. While mixed, the results weren't the cause of the dip so much as the spending plans.
Zscaler Inc. (NASDAQ:ZS) shares fell more than 31% on Wednesday after the cloud security company shared softer-than-expected forward guidance, drawing attention from a modest fiscal third quarter earnings beat. For the fiscal fourth quarter, Zscaler projected revenue of $875 million to $878 million, slightly below consensus expectations of $879 million.
Zscaler's stock could be set to lose more than one-quarter of its value in a single session.
Zscaler Inc (NASDAQ:ZS) stock is among the worst on Wall Street today, down 25.8% to trade at $137.03.
Shares of Zscaler ZS plunged over 23% in Wednesday premarket trading after the cybersecurity company delivered better-than-expected quarterly earnings but issued cautious guidance that intensified concerns over slowing customer acquisition, rising competition and mounting infrastructure costs tied to the artificial intelligence boom. The sharp selloff highlighted growing investor sensitivity toward software companies whose valuations remain heavily dependent on sustained high growth, particularly in cybersecurity where competition has intensified sharply over the past year.
I am downgrading Zscaler (ZS) to a “sell” following a disappointing Q3 FY26, with structural growth concerns outweighing its cheap valuation. Organic revenue growth stagnates at 21%, with FY27 guidance cut to 16-17% and organic Net New ARR growth slowing to single digits, as Zscaler struggles to win new enterprise customers. Competitive pressures from fully integrated platforms and leadership departures threaten ZS's pipeline and sales velocity, compounding platformization headwinds.
Zscaler raised FY26 guidance after a strong Q3, leaning into AI security and record margins while cautioning on sales shifts and product ramp.
Zscaler, Inc. (ZS) Q3 2026 Earnings Call Transcript