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

Zscaler (NASDAQ:ZS) issued its quarterly earnings data on Thursday, September 3rd. The company reported $1.19 earnings per share for the quarter, beating analysts’ consensus estimates of $1.09 by $0.10, Briefing.com reports. The business had revenue of $898.19 million for the quarter, compared to analysts’ expectations of $876.96 million. Zscaler had a negative net margin of 1.88% and a positive return on equity of 1.23%. The company’s revenue was up 24.9% on a year-over-year basis. During the same period in the previous year, the business 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 Price Performance

Shares of ZS stock opened at $201.80 on Tuesday. Zscaler has a 52-week low of $114.63 and a 52-week high of $336.99. The firm has a market capitalization of $32.90 billion, a P/E ratio of -517.44, a P/E/G ratio of 20.49 and a beta of 0.94. The stock has a 50 day moving average price of $180.73 and a 200 day moving average price of $155.42. The company has a debt-to-equity ratio of 0.65, a quick ratio of 1.70 and a current ratio of 1.70.

Key Zscaler News

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: IBM and Red Hat partnership strengthens Zscaler’s AI-security story. Zscaler will combine its Autonomous Application Shield with IBM and Red Hat’s Lightwell platform to protect private applications during the period between vulnerability disclosure and software patching. The solution is intended to provide inline protection and validated remediation against frontier AI-powered threats, potentially expanding Zscaler’s enterprise opportunity. Zscaler Collaborates with IBM and Red Hat
• Positive Sentiment: CEO Jay Chaudhry is emphasizing the need for zero-trust security for AI agents. In media interviews ahead of Zscaler’s investor day, Chaudhry said autonomous agents could become a major corporate-security weakness and argued that organizations should not implicitly trust them. The comments reinforce demand for Zscaler’s zero-trust and AI-security products as companies deploy more agentic systems. Zscaler CEO on AI risks
• Positive Sentiment: Analyst valuation leaves some potential upside. Zscaler has a reported consensus price target of $219.78, above its recent quoted level, supporting the bullish view among analysts. Zscaler consensus target price
• Neutral Sentiment: Investor-day expectations are described as muted. Morgan Stanley reportedly expects limited near-term surprises from the event, suggesting the partnership and AI-security narrative may be more important to the stock than a major forecast revision. Morgan Stanley investor-day expectations

Wall Street Analyst Weigh In

A number of equities research analysts recently weighed in on ZS shares. Canaccord Genuity Group reaffirmed a “buy” rating and set a $210.00 price target on shares of Zscaler in a report on Friday, September 4th. Piper Sandler lifted their price objective on shares of Zscaler from $160.00 to $175.00 and gave the stock a “neutral” rating in a report on Friday, September 4th. Jefferies Financial Group reaffirmed a “buy” rating and set a $220.00 target price on shares of Zscaler in a report on Wednesday, September 2nd. Wedbush reaffirmed an “outperform” rating and issued a $215.00 price objective on shares of Zscaler in a report on Monday, September 28th. Finally, Wolfe Research restated an “outperform” rating and issued a $150.00 target price on shares of Zscaler in a research report on Thursday, June 11th. Thirty-four investment analysts have rated the stock with a Buy rating, six have assigned a Hold rating and two have assigned a Sell rating to the stock. According to data from MarketBeat, the company presently has an average rating of “Moderate Buy” and an average target price of $220.78.

Insider Activity at Zscaler

In other news, CFO Kevin Rubin sold 519 shares of the firm’s stock in a transaction that occurred on Friday, September 25th. The shares were sold at an average price of $197.28, for a total transaction of $102,388.32. Following the transaction, the chief financial officer directly owned 42,768 shares of the company’s stock, valued at approximately $8,437,271.04. This trade represents a 1.20% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the SEC, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Jagtar Chaudhry sold 2,852 shares of Zscaler stock in a transaction on Wednesday, September 16th. The shares were sold at an average price of $192.76, for a total value of $549,751.52. Following the sale, the chief executive officer directly owned 340,186 shares of the company’s stock, valued at approximately $65,574,253.36. This trade represents a 0.83% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Insiders have sold a total of 29,053 shares of company stock worth $5,610,165 over the last ninety days. 17.20% of the stock is currently owned by company insiders.

Zscaler Company Profile

Zscaler, Inc is a cloud-based cybersecurity company that provides security services designed to help organizations connect users, applications, devices and workloads securely. Its platform is built around a zero-trust security model, which verifies access based on identity, context and policy rather than relying primarily on traditional network perimeters.

The company’s offerings include Zscaler Internet Access, which helps secure internet and software-as-a-service access, and Zscaler Private Access, which provides controlled access to private applications without extending an organization’s network to remote users.