Zscaler stock climbed after the cybersecurity firm reported fiscal fourth-quarter earnings, revenue and billings that topped estimates, while its fiscal 2026 sales guidance came in above estimates. Also, management highlighted a new financial metric for Wall Street analysts.
Reported after the market close on Tuesday, Zscaler earnings rose 23% from a year earlier to 89 cents a share on an adjusted basis. Revenue climbed 21% to $719 million, the San Jose, Calif.-based firm said.
Zscaler stock analysts had expected earnings of 80 cents per share on sales of $707 million. Also, fiscal Q4 billings rose 32% to $1.202 billion, compared with estimates for $1.143 billion.
"Management is highlighting annual recurring revenue as its preferred growth metric, instead of billings, which is similar to many other software companies," said BMO Capital Markets analyst Keith Bachman in a report.
"Zscaler reported that ARR of $3 billion grew 22% year-over-year, similar to last quarter," Bachman added. "Net new ARR of about $200 million was strong, in our judgment, and grew 16% from $170 million a year ago, and improved from 6% last quarter. On a sequential basis, net new ARR grew 48% quarter-over-quarter compared to 34% in the year-ago quarter."
Sales Guidance Above Views
For fiscal 2026, which starts with the October quarter, Zscaler forecast EPS of $3.66, in line with estimates. Zscaler predicted revenue in a range of $3.265 billion to $3.284 billion, above estimates of $3.2 billion.
In extended trading on the stock market today, Zscaler stock climbed over 1% to 277.63 in early trading.
Heading into the Zscaler earnings release, the cybersecurity stock had surged 52% in 2025. Also, ZS stock had an IBD Composite Rating of 69 out of a best-possible 99, according to IBD Stock Checkup.
Further, Zscaler is a leader in Secure Access Service Edge, or SASE, and Zero Trust identity services.
Zscaler provides cloud-based cybersecurity services via 150 data centers worldwide. Zscaler's web security gateways inspect customers' data traffic for malware. Further, the Zscaler Private Access cloud service replaces virtual private networks to support remote work.
Zscaler competes with Palo Alto Networks and Microsoft as well as startup Wiz. Google parent Alphabet has agreed to buy Wiz in a $25 billion cash deal.
Morgan Stanley on Tuesday upgraded Zscaler stock to overweight from equal weight, partly on a recent acquisition of Red Canary.
"While Zscaler has a host of AI Security products, the company recently improved its posturing meaningfully with their $675 million acquisition of Red Canary, which closed on Aug. 1," analyst Meta Marshall said in a report. "This acquisition helps enter them into Managed Detection and Response (MDR), a market which is set to see meaningful growth as enterprises try to automate the security operations center against a growing number of more advanced threats with AI. Given the cost of a breach by enterprises not using AI in their security center is roughly 24% higher than the average threat, this will be a growing investment area going forward."
Zscaler Stock Technical Ratings
Meanwhile, Zscaler stock holds an Accumulation/Distribution Rating of D+, according to IBD Stock Checkup. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.
Also, Zscaler stock holds an IBD Composite Rating of 91 out of 99. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Zscaler belongs to the IBD Computer-Software Security group, which ranks No. 116 out of 197 groups tracked.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
