Zscaler reported financial results that surpassed Wall Street expectations despite a stock price decline on Friday. The cloud security company generated revenue growth of 25% compared to the prior year, reaching approximately $719 million in the quarter. The company posted a net loss of $3.4 million, or 2 cents per share, representing an improvement from a net loss of $17.6 million, or 11 cents per share, in the comparable prior-year period.
Annual recurring revenue climbed 25% year-over-year to $3.77 billion, exceeding StreetAccount’s estimate of $3.75 billion. CEO Jay Chaudhry attributed the results to increasing adoption of the company’s Zero Trust cloud security architecture and highlighted momentum in a newly launched Zero Trust offering designed for artificial intelligence agents. He characterized the AI-focused security opportunity as substantial, noting it is expected to accelerate materially in coming fiscal years. Bookings related to AI security totaled $100 million over the past year and expanded more than 50% during the most recent quarter on a sequential basis.
Zscaler’s forward guidance also exceeded 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, surpassing estimates of $927 million in revenue and $1.08 in adjusted EPS. The company guided for full-year revenue in the range of $3.91 billion to $3.94 billion, above the $3.90 billion estimate, and adjusted EPS between $4.86 and $4.90, exceeding the $4.60 estimate.
Despite the strong results and guidance, Zscaler shares declined on the day. The company’s stock performance has lagged competitors this year, falling 20% as other cybersecurity firms reached new heights. The decline comes after the company took a cautious approach to prior guidance following departures of two sales leaders last quarter. Chaudhry maintained that the market underestimates Zscaler’s competitive advantages in security infrastructure as AI agent adoption expands.
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