Zscaler Inc (NASDAQ:ZS) shares were down on Wednesday morning, even after the company reported upbeat fiscal fourth-quarter results.
Track ZS stock action here.
Here are some analyst takeaways.
- Scotiabank analyst Patrick Colville reaffirmed a Sector Outperform rating, while reducing the price target from $360 to $334.
- KeyBanc Capital Markets analyst Eric Heath maintained an Overweight rating, while lifting the price target from $345 to $350.
- Rosenblatt Securities analyst Catharine Trebnick reiterated a Buy rating, while raising the price target from $315 to $330.
- Wedbush analyst Daniel Ives maintained an Outperform rating and price target of $330.
- Needham analyst Mike Cikos reiterated a Buy rating and price target of $350.
- Cantor Fitzgerald analyst Jonathan Ruykhaver reaffirmed an Overweight rating and price target of $340.
Check out other analyst stock ratings.
Scotiabank: Zscaler delivered a "clean" beat on both its top and bottom lines, Colville said in a note. The company's annual recurring revenues (ARR) rose 22% in the quarter and the initial guidance for fiscal 2026 shows 19% growth, he added.
Management guided to operating margin expansion of around 65 basis points (bps) for fiscal 2026, which "leaves some room for upside," the analyst stated.
The organic new ARR guidance for the year of around 7% seems reasonable, "even if we are left scratching our heads as to why Red Canary ARR is so much lower under Zscaler ownership than the amount the company disclosed standalone," he further wrote.
KeyBanc Capital Markets: Zscaler reported billings of $1,202 million, up 32% year-on-year, topping consensus of $1,145 million, which assumed 26% y/y growth, Heath said. Revenue came in at $719 million, beating expectations of $708 million, he added.
The company's fourth-quarter ARR of $3.015 billion was sequentially flat, while net new ARR growth accelerated to 16% year-on-year, from 6% in the previous quarter, the analyst stated.
"We continue to see strong momentum in the SASE market, a strengthening portfolio of emerging products to cross-sell, and an experienced GTM leadership team selling to the C-suite," he further wrote.
Rosenblatt Securities: Zscaler delivered strong quarterly results, "substantially exceeding expectations across growth and profitability metrics," Trebnick said. The company's ARR surpassed $3 billion, with three key growth areas, namely AI Security, Zero Trust Everywhere and Data Security Everywhere, she added.
The company announced "exceptionally strong guidance," significantly higher than Street revenue expectations, even without considering the contribution from the Red Canary acquisition, the analyst wrote.
Zscaler seems well-positioned to maintain 22% year-on-year revenue growth, she further stated.
Wedbush: Zscaler's total revenues grew 21% year-on-year and 6% sequentially, Ives said. Management provided strong guidance for fiscal 2026 "as demand for the company's entire product portfolio remains strong driven by new Cloud and AI solutions," he wrote.
Zscaler's ARR grew 22% year-on-year to $3.02 billion, surpassing guidance of $3.00 billion, as demand for zero trust security continues to accelerate driven by strength in the company's new AI products, the analyst stated. The AI segments combined "are now over $1 billion in ARR and growing faster than total ARR," he further stated.
Needham: Zscaler's billing grew 32% year-on-year to $1.2 billion, which "materially outperformed" implied guidance of $1.140-$1.145 billion and consensus of $1.143 billion, Cikos said. Management guided to 22%-23% ARR growth for fiscal 2026 to $3.676-$3.698 billion, he added.
The ARR guidance did not include any contribution from Red Canary contracts that are up for renewal in fiscal 2026, the analyst stated. "We believe Zscaler is executing at a high-level as a result of the expanded platform and go-to-market changes under CRO Mike Rich," he further wrote.
Cantor Fitzgerald: Zscaler outperformed consensus estimates on revenue, billings, earnings, and free cash flows, Ruykhaver said. The company continues to grow its market share, "benefiting from its simple-to-use, scalable, highly effective, and relatively low-cost solution," he wrote.
Zscaler's emerging growth categories of Zero Trust Everywhere, Data Security Everywhere and AI Security, now represent more than $1 billion in combined ARR and are growing faster than the overall business, the analyst stated. Customers contributing $1 million in ARR grew 18% year-on-year in the fiscal fourth quarter, while those spending over $100,000 grew by 13%, he added.
ZS Price Action: Shares of Zscaler had declined by 1.03% to $271.76 at the time of publication on Wednesday.
Read More:
• Zscaler Just Boosted Zero-Trust Lead—AI, Red Canary Deal Add Momentum
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