Zscaler stock soars after earnings beat and strong outlook
Zscaler stock surged Thursday after the cloud security company beat Wall Street's fiscal fourth-quarter estimates and issued upbeat guidance, as rising AI-related cyber risk spurred demand for its tools. Shares jumped about 8.3% immediately after the report to roughly $193.56. Adjusted EPS came in at $1.19 versus $1.09 expected, while sales reached about $898 million against an $877 million consensus, according to CNBC.
Key Takeaways
- Zscaler stock rose about 8.3% after results, trading near $193.56.
- Fiscal Q4 adjusted EPS of $1.19 and revenue near $898 million both beat estimates.
- Annual recurring revenue climbed 25% year over year to $3.77 billion.
- Next-quarter and full-year guidance topped Wall Street forecasts.
- CEO Jay Chaudhry tied momentum to Zero Trust and AI-agent security demand.
For investors tracking cyber names in the Net Worth & Wealth space, the print mattered because Zscaler shares had fallen about 20% this year even as peers hit highs.
Why did Zscaler stock jump after earnings?
The stock reacted to a clean beat and better-than-feared outlook. Adjusted earnings of $1.19 per share topped the $1.09 LSEG estimate, and revenue of roughly $898 million beat the $877 million expectation.
Revenue rose about 25% from roughly $719 million a year earlier. On a GAAP basis, Zscaler posted a net loss of $3.4 million, or 2 cents per share, narrower than a $17.6 million loss, or 11 cents, a year ago.
Yahoo Finance noted adjusted operating income of $218.4 million versus $207.4 million expected, with a 24.3% margin. Billings reached $1.34 billion, up 11.8% year over year.
How strong was the guidance that lifted the stock?
For the fiscal first quarter, Zscaler guided to $935 million to $939 million in revenue and adjusted EPS of $1.15 to $1.16. Those ranges beat Street revenue of about $927 million and adjusted EPS of $1.08.
For the full year, management pointed to revenue of $3.91 billion to $3.94 billion, above a $3.90 billion estimate. Adjusted EPS was pegged at $4.86 to $4.90, ahead of a $4.60 consensus. Yahoo Finance put full-year adjusted EPS guidance at about $4.88 at the midpoint, roughly 6.1% above estimates.
What does AI demand mean for Zscaler going forward?
Chaudhry told CNBC he is "very bullish" on Zero Trust security for AI agents, calling it a longer-term opportunity with significant barriers to entry. He said AI-security bookings totaled $100 million over the last year and grew more than 50% sequentially this quarter.
ARR of $3.77 billion rose 25% and edged past a $3.75 billion StreetAccount estimate. Seeking Alpha separately reported that the company announced a 3% workforce reduction alongside the AI-driven results.
Last quarter, the stock had its worst day on record after prudent guidance following two sales-leader departures. Thursday's rebound suggests investors are again pricing in platform differentiation as agentic AI threats expand.