Zs Stock: Zscaler Q4 Sales Top Estimates but Shares Drop
Zscaler beat fourth-quarter revenue and adjusted EPS expectations, but zs stock dropped after the results. The company posted $815. 8 million in sales, a 25. 9% year-on-year increase that narrowly outpaced analyst estimates.
Zs Stock reaction after beats
The company reported $815. 8 million in Q4 revenue versus analyst estimates of $798. 8 million, a 2. 1% revenue beat, and posted adjusted EPS of $1. 01 compared with estimates of $0. 90. Despite the upside on both top and bottom lines, zs stock fell following the release.
Q4 results and margins
Zscaler’s adjusted operating income came in at $181 million, topping analyst estimates of $174. 6 million and yielding a 22. 2% adjusted operating margin. The firm’s GAAP operating margin remained negative at -6. 3%, the same as the same quarter last year. Free cash flow margin declined to 20. 7% from 52. 4% in the previous quarter.
Guidance raised; growth metrics mixed
Management lifted full-year revenue guidance to $3. 32 billion at the midpoint from $3. 29 billion and raised full-year adjusted EPS guidance to $4. 01 at the midpoint, a 5. 4% increase. The company expects next quarter revenue to be around $835 million, which it says is close to analysts’ estimates and implies roughly a 23. 2% year-on-year increase in sales for the next quarter.
The report highlighted multi-year expansion: Zscaler grew sales at a 41. 1% compound annual rate over the last five years and posted an annualized revenue growth rate of 25. 8% over the last two years. Sell-side analysts in the context expect revenue to grow about 20. 2% over the next 12 months.
CEO, Chairman and Founder Jay Chaudhry said, "We believe Zscaler is the cybersecurity platform for the AI age - our in-line Zero Trust platform is uniquely architected to secure the unprecedented speed and scale of AI and agentic workflows. Organizations racing to adopt AI are looking to us to provide the security solution they trust, and we're just scratching the surface of this massive future growth opportunity. " That comment was offered alongside the company’s earnings and guidance updates.
Even with solid beats—$815. 8 million in revenue, $1. 01 adjusted EPS and $181 million adjusted operating income—the market reaction left zs stock lower on the day.
Looking ahead, the company’s next confirmed milestones are its guidance targets: roughly $835 million in revenue for the coming quarter, a full-year revenue midpoint of $3. 32 billion, and an adjusted EPS midpoint of $4. 01. Those figures form the immediate measure by which performance will be judged in the next reporting period.
