In the swirling currents of the financial world, where fortunes ripple like gentle waves and then crash like mighty storms, the tale of Zscaler (ZS) unfolds. This cybersecurity firm basked in the sun’s warmth for much of the year, only to find its vessel battered by a sudden squall following the release of its fiscal 2025 fourth-quarter results. Despite a sturdy performance, rich in promise and laced with optimistic forecasts, the stock dipped by 4% in the wake of Wednesday’s trading. Yet, let us not forget: even after this retreat, the stock has risen roughly 50% since the dawn of this calendar year.
Gather close, dear reader, as we glean deeper into the brass tacks of Zscaler’s outcomes and projections, for perhaps in this fall, we might find the seeds of opportunity buried beneath the rubble.
A Beacon of Promise
While the likes of CrowdStrike (CRWD) and Palo Alto Networks (PANW) often capture the spotlight and enjoy the accolades of the market, Zscaler humbly tends its own patch within the burgeoning field of cybersecurity. It has nurtured a focus on zero trust security-a doctrine tending to the belief that no user or device warrants implicit trust. Indeed, in a world rife with unbridled connectivity and shadows of deception, every entrance must be safeguarded, each pathway verified and revalidated.
As the tendrils of artificial intelligence weave their way through the cyber landscape, laying their snares and complexities, Zscaler finds fertile ground in areas like AI Security, Zero Trust Everywhere, and Data Security Everywhere. These pursuits swelled to over a billion dollars in annual recurring revenue during its fiscal Q4, concluding July 31. The company is diligently crafting solutions to secure communications that flit between agents and applications, bringing light to corners previously neglected.
These endeavors propelled Zscaler to remarkable heights, with revenue climbing by 21% year over year to touch the sky at $719.2 million-marching past the cautious estimates set by management. The adjusted earnings per share (EPS) rose to $0.89, outpacing expectations like a determined mule laboring uphill when only a gentler incline was forecasted.
revenue is likely to rest between $3.265 billion and $3.284 billion-a growth rate of approximately 22% to 23%. The acquisition of Red Canary is projected to augment revenue by $90 million. Furthermore, the anticipated annual recurring revenue forecasts an uptick of 22% to 23% as well, with the adjusted EPS positioned between $3.64 and $3.68.
As we peer toward the horizon of fiscal 2026’s first quarter, Zscaler anticipates revenue between $772 million and $774 million, expecting adjusted EPS to land within the range of $0.85 and $0.86.
| Metric | Fiscal Q1 Guidance | Fiscal 2026 Guidance |
|---|---|---|
| Revenue | $772 million to $774 million | $3.265 billion to $3.284 billion |
| Revenue growth | 23% | 22% to 23% |
| Adjusted EPS | $0.85 and $0.86 | $3.64 to $3.68 |
| Calculated billings | N/A | $3.676 billion to $3.698 billion |
Should We Seize the Moment?
The quarter was sturdy, but what speaks even more profoundly is the upturn in calculated billings and deferred revenue. They whisper sweet nothings to us about budding growth in fiscal 2026. Zscaler’s outlook, though optimistic, tends to be graciously conservative; hence, a revenue trajectory in the mid-to-high 20% range is not merely a dream.
The firm is basking in the glow of fresh growth avenues, and the rise of AI agents carries with it the potential for further ascendance. Learning from fellow traveler CrowdStrike, Zscaler has birthed Z-Flex, a flexible payment program designed to meet customers where they are. Customers wishing to pay for and deploy modules only as necessity dictates-much like farmers reaping yields according to the seasons-have found the offering appealing as evidenced by a remarkable 50% swell in flex billings during fiscal Q4.
Today, Zscaler trades at a forward price-to-sales ratio of roughly 13, when measured against analysts’ consensus for the current fiscal year. Should revenue growth indeed hover around 25%, this multiple appears just but, alas, they are not handing these stocks out like candy on Halloween. In sum, while I view Zscaler as a steadfast stock to hold, a further dip in price would make the prospect of purchasing all the more enticing.
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2025-09-06 18:12