Observed Signal · Sep 3, 2026 · Earnings Report · Source: CNBC Technology · Impact: 2/5 · Sentiment: Positive
Zscaler stock rises on earnings beat and upbeat guidance
Zscaler reported fiscal fourth-quarter 2026 earnings that beat Wall Street expectations, sending its stock higher. The cloud security company posted adjusted EPS of $1.19, exceeding the $1.09 estimate, and revenue of $898 million, above the $877 million forecast. Revenue jumped 25% year-over-year from $719 million. Annual recurring revenue rose 25% to $3.77 billion, surpassing StreetAccount's $3.75 billion projection. CEO Jay Chaudhry highlighted early momentum for the company's Zero Trust security solution for AI agents, which he expects to accelerate into fiscal 2028 and 2029. The company also issued better-than-expected guidance for the fiscal first quarter and full year. Despite a 20% stock decline this year, management remains confident in its differentiation strategy.
Earnings report from a key cybersecurity vendor shows strong demand for AI security infrastructure, relevant to AI-driven advertising technologies and enterprise adoption.
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Key Takeaways & Evidence Grounding
- Zscaler's adjusted EPS was $1.19 vs. $1.09 expected, revenue $898M vs. $877M expected.
- Revenue increased 25% year-over-year to $898M.
- Annual recurring revenue rose 25% to $3.77B.
- CEO Jay Chaudhry is bullish on the Zero Trust iteration for AI agents, with bookings totaling $100M over the past year.
- Fiscal Q1 guidance: revenue $935-$939M, adjusted EPS $1.15-$1.16; full-year revenue $3.91-$3.94B.
Connected Companies & Entities
2 Entities mapped“The cloud security company beat Wall Street's fiscal fourth-quarter estimates and provided upbeat guidance.”
“Zscaler's performance compared to LSEG estimates.”
Ontology Mapping & Concepts
Related Market Signals & Shifts
Recent verified developments and strategic activity across this market segment.
Zscaler Falls 31% After Prudent Guidance, Sales Shakeup
Zscaler shares plunged about 31% — its largest one-day drop — after the cybersecurity firm issued cautious fiscal guidance that disappointed analysts despite beating fiscal third-quarter results. Management forecasted 16%–17% year-over-year ARR growth for fiscal 2027 and provided quarterly revenue guidance of $875 million to $878 million, slightly below FactSet expectations. Zscaler reported adjusted EPS of $1.08 on $850 million in revenue for the quarter, topping consensus. The company said it lost two sales leaders during the quarter, and finance chief Kevin Rubin described a “prudent approach” to guidance amid leadership transitions. Zscaler also flagged higher capital expenditures driven by a memory-price squeeze and noted it is working with Anthropic on Project Glasswing. The weak outlook prompted at least one analyst firm, Evercore ISI, to cut its rating and price target.
Zscaler Looks Promising Ahead of Earnings
Cybersecurity stocks are rising, and CNBC Options Action contributor Michael Khouw highlights Zscaler (ZS) as an attractive long into its upcoming earnings. Khouw notes a 12.2% implied move priced into options (vs. an 11.3% long-term average) and prefers a bullish, low-premium options structure (selling an OTM put to fund a call spread). He cites Zscaler’s 26% year‑over‑year revenue growth, expected trailing 12‑month revenue of $3.32 billion, ~27% free cash flow margins, roughly $1 billion NTM free cash flow, and $1.7 billion net cash. Khouw argues Zscaler’s Zero Trust Exchange and AI security features (AI Guardrails) position it well for emerging AI workloads, while flagging risks including retention deceleration, hyperscaler competition, macro headwinds, unmonetized AI features, and GAAP losses.
Cybersecurity stock Zscaler's charts turn bullish: Jay Woods
In a CNBC Pro segment, technician Jay Woods discusses Zscaler (ZS), a cybersecurity company that has underperformed its sector peers. While CrowdStrike, Fortinet, Okta, and Palo Alto Networks have gained over 100% year-to-date, Zscaler shares fell as much as 65% from 52-week highs and remain down 13% this year. However, Woods observes a bottoming formation on both daily and weekly charts, with a bullish crossover in MACD and a breakout above $195 resistance. He suggests upside targets of $250-$265, representing 25-30% potential upside, with support at $165. The analysis highlights relative rotation within the cybersecurity sector, indicating that laggards like Zscaler may see renewed strength.
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