TLDR
- Zscaler posted Q4 adjusted EPS of $1.19, beating the $1.09 estimate, with revenue of $898.2 million vs the $927 million expected
- Revenue grew 25% year-over-year, with a gross profit margin of 77%
- Q1 FY2027 revenue guidance of $935-$939 million came in above Wall Street’s $927 million estimate
- ZS stock rose 5% in after-hours Thursday before falling 3.4% in Friday premarket
- JPMorgan kept its Overweight rating and $215 price target; Stephens raised its target to $225
Zscaler beat earnings and raised its outlook. The market still sold it off. That about sums up where ZS stands right now.
🚨 $ZS EARNINGS UPDATE 🚨
Zscaler just delivered a strong Q4:
📈 Revenue: $898.2M (+25% YoY)
💰 Adjusted EPS: $1.19 vs. $1.09 expected
🔥 ARR: $3.77B (+25%)
🤖 AI security becoming a major growth driverBut there’s a catch… FY2027 ARR growth is guided to only ~17%, a…
— Geovany (@Geovany2300) September 4, 2026
The cybersecurity company reported Q4 adjusted earnings of $1.19 per share, up from 89 cents a year ago and ahead of the Wall Street estimate of $1.09. Revenue for the quarter ended July 31 came in at $898.2 million, a 25% jump year-over-year and above the consensus of $877 million.
The stock climbed 5% to $186.27 in after-hours trading Thursday before pulling back. By Friday premarket, ZS was down 3.4%, having closed Thursday’s regular session at $177.80.
Annual recurring revenue reached $3,771 million, beating the consensus estimate by $26 million. That’s a 25% year-over-year increase.
Zscaler also raised its Q1 FY2027 revenue guidance to a range of $935 million to $939 million, above the $927 million Wall Street had expected. EPS guidance of $1.15 to $1.16 for the quarter also cleared the analyst estimate of $1.08.
Analyst Reaction
JPMorgan kept its Overweight rating and $215 price target, noting the beat on both revenue and ARR was larger than anything seen earlier in the year. The firm described the updated guidance as appropriately prudent.
Stephens raised its price target to $225. Needham lifted its target to $215. Stifel reiterated a Buy with a $200 target. Scotiabank also raised its target to $200, pointing to the acceleration in new ARR. Canaccord Genuity held its Buy rating with a $210 target.
The prior quarter’s guidance miss had rattled investor confidence, so this quarter’s clean beat was seen as a step in the right direction.
The Bigger Picture for ZS
ZS is down 21% this year, a stark contrast to peers CrowdStrike and Palo Alto Networks, which are up 83% and 80% respectively.
Investors have been worried that AI could make traditional security software redundant. Zscaler pushed back on that view, arguing AI-driven attacks are increasing the need for the kind of infrastructure it provides.
The company also announced a 3% reduction in workforce and said it filled two vacant senior sales roles. Canaccord flagged that FY2027 guidance may be conservative partly due to the ongoing sales force transition.
InvestingPro analysis flagged ZS as appearing undervalued at current levels relative to its fair value estimate.
The last reported stock price on Friday premarket was $171.65, down $6.15 or 3.46%.
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