Zscaler reported financial results that exceeded Wall Street expectations, yet its shares fell on Friday following the announcement. The cloud security firm’s revenue climbed 25% compared to the prior year, reaching approximately $719 million, while the company posted a net loss of $3.4 million, or 2 cents per share, an improvement from a net loss of $17.6 million, or 11 cents per share, in the corresponding quarter a year earlier.
Chief Executive Officer Jay Chaudhry attributed the quarterly performance to increased customer adoption of the company’s Zero Trust cloud security architecture and advancements in its technology offerings. He expressed particular optimism regarding a recently introduced Zero Trust iteration designed for artificial intelligence agents, which he characterized as having substantial long-term potential with significant barriers to entry. Chaudhry indicated this product is expected to experience accelerated growth in the coming fiscal years.
The company’s annual recurring revenue grew 25% year-over-year to $3.77 billion, surpassing a StreetAccount estimate of $3.75 billion. Bookings related to AI security totaled $100 million over the past year and expanded more than 50% sequentially during the quarter. Despite the positive metrics, Zscaler shares have declined 20% this year, with the stock experiencing significant pressure following executive departures and conservative guidance issued in the prior quarter.
Zscaler’s forward guidance also surpassed analyst expectations. For the upcoming fiscal first quarter, management projected revenue between $935 million and $939 million, with adjusted earnings per share of $1.15 to $1.16, exceeding consensus estimates of $927 million in revenue and $1.08 in adjusted EPS. For the full fiscal year, the company anticipated revenue between $3.91 billion and $3.94 billion and adjusted EPS ranging from $4.86 to $4.90, both above prior estimates.
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