Zscaler reported fiscal fourth-quarter results that exceeded Wall Street expectations, though shares fell on the day of announcement. The cloud security company’s revenue grew 25% compared with the prior year, reaching approximately $719 million in the prior year period. The company posted a net loss of $3.4 million, or 2 cents per share, a significant improvement from a net loss of $17.6 million, or 11 cents per share, recorded in the year-ago quarter.
Annual recurring revenue increased 25% year-over-year to $3.77 billion, surpassing StreetAccount’s estimate of $3.75 billion. Chief Executive Jay Chaudhry attributed the quarterly performance to growing adoption of the company’s Zero Trust cloud security architecture and highlighted recent momentum in Zero Trust offerings tailored for artificial intelligence agents. The executive projected the AI-focused security products would accelerate adoption through fiscal years 2028 and 2029, characterizing the opportunity as significant with meaningful barriers to entry. Bookings related to AI security totaled $100 million over the past year and grew more than 50% sequentially during the quarter.
Looking ahead, Zscaler provided guidance that exceeded analyst expectations. For the upcoming fiscal first quarter, the company forecast revenue between $935 million and $939 million with adjusted earnings per share of $1.15 to $1.16, ahead of consensus estimates of $927 million and $1.08 per share respectively. Full-year guidance called for revenue in the range of $3.91 billion to $3.94 billion, above the $3.90 billion estimate, and adjusted earnings per share between $4.86 and $4.90 compared with an estimate of $4.60.
Despite beating expectations, Zscaler shares declined following the announcement. The stock has fallen 20% during the year while competitor cybersecurity stocks have reached new highs. The company faced headwinds following the prior quarter when management adopted a conservative guidance approach following departures of two sales leaders. Chaudhry contended that markets are underappreciating Zscaler’s distinctive competitive positioning in emerging security needs, particularly as artificial intelligence agent adoption expands across enterprises.
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