Zscaler beats Q4 estimates; shares rise

Investing.com -- Zscaler Inc (NASDAQ: ZS) reported fourth quarter results that exceeded analyst expectations, with adjusted earnings per share of $1.19 compared to the consensus estimate of $1.09 and revenue of $898.2 million versus the estimate of $876.96 million. Revenue grew 25% YoY from the prior year period.

Shares rose 4% in after-hours trading Thursday following the announcement.

The cloud security company posted adjusted net income of $198.2 million for the quarter ended July 31, 2026, up from $146.7 million in the same period last year. Annual recurring revenue grew 25% YoY to $3.77 billion, with net new ARR of $246 million during the quarter. Excluding the Red Canary acquisition, which contributed $141 million in ARR, the company's ARR grew 20% YoY. The company's adjusted operating margin reached a record 24% of revenue.

For the first quarter of fiscal 2027, Zscaler expects revenue of $935 million to $939 million, representing approximately 19% YoY growth. The midpoint of $937 million falls below the typical analyst expectations for stronger sequential growth. The company projects adjusted EPS of $1.15 to $1.16 for the quarter.

For the full fiscal year 2027, Zscaler forecasts revenue of $3.908 billion to $3.938 billion, representing growth of 16.6% to 17.5%. The company expects ARR of $4.396 billion to $4.426 billion, growth of approximately 16.6% to 17.4%. Adjusted operating income is projected at $924 million to $932 million, representing approximately 21% growth, with adjusted EPS expected to range from $4.86 to $4.90.

"Our growth engine continues to broaden beyond users, with a strong contribution from non-seat-based solutions, continued Z-Flex momentum, record large-deal activity, and improving sales productivity," said Kevin Rubin, chief financial officer of Zscaler.

The company generated $279.3 million in cash from operations during the fourth quarter, representing 31% of revenue.

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