Zscaler Q4 Earnings Beat: Will Strong Guidance Lift the Stock Higher?

Zscaler ZS reported fourth-quarter fiscal 2025 non-GAAP earnings of 89 cents per share, which beat the Zacks Consensus Estimate by 11.3%. Moreover, the bottom line increased 23.6% year over year, driven by higher revenues and efficient cost management.

ZS’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 14.7%.

Zscaler’s fourth-quarter fiscal 2025 revenues of $719.2 million beat the Zacks Consensus Estimate by 1.9% and exceeded management’s guidance of $705-$707 million. The top line grew 21% year over year, demonstrating the company’s strong market position, fueled by heightened customer commitments to the Zero Trust Exchange platform and a growing demand for its artificial intelligence (AI)-based solutions.

After the stronger-than-expected third-quarter results, Zscaler raised its guidance for fiscal 2025. The stronger-than-expected results and raised guidance for fiscal 2025 are likely to lift ZS stock higher. Zscaler shares have gained 57.4% year to date, outperforming the Zacks Security industry’s growth of 10.1%.

Zscaler, Inc. Price, Consensus and EPS Surprise

Zscaler, Inc. price-consensus-eps-surprise-chart | Zscaler, Inc. Quote

Zscaler’s Q3 Top-Line Details

During the fiscal fourth quarter, Zscaler’s calculated billings increased 32% year over year to $1.2 billion.

Region-wise, the Americas accounted for 55% of revenues, while the EMEA contributed 29%. The Asia Pacific and Japan made up the remaining 16%.

In the fiscal fourth quarter, ZS added multiple large customers across all its offerings, including ZIA, ZPA and ZDX.

Remaining Performance Obligations (RPO), representing Zscaler’s committed non-cancelable future revenues, were $5.8 billion as of July 31, which increased 31% year over year. The current RPO is approximately 46% of the total RPO.

At the end of the quarter, the company had 664 customers with $1 million or higher annualized recurring revenues (ARR). Zscaler’s customer count for ARR of more than $100,000 reached 3,494 at the end of the fourth quarter.

Operating Details of ZS

The non-GAAP gross profit increased 18.5% year over year to $570.1 million. The non-GAAP gross margin contracted 190 basis points (bps) on a year-over-year basis to 79.3%.

Total non-GAAP operating expenses, accounting for 57.2% of revenues, increased 16.3% year over year to $411.2 million.

The non-GAAP operating income was $158.9 million compared with the year-ago quarter’s $127.5 million. The non-GAAP operating margin expanded 60 basis points year over year to 22.1%.

Zscaler’s Balance Sheet & Cash Flow

As of July 31, 2025, Zscaler had $3.57 billion in cash, cash equivalents and short-term investments compared with $3.01 billion as of April 30, 2025.

The company generated operating and free cash flows of $250.6 million and $171.9 million, respectively, during the fourth quarter. In fiscal 2025, Zscaler generated operating and free cash flows of $972.5 million and $726.7 million, respectively.

Zscaler Initiates Guidance for FY26

Zscaler initiated its outlook for fiscal 2026. The company forecasts revenues in the range of $3.265-$3.284 billion. The Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $3.19 billion, suggesting growth of 19.8% from fiscal 2025.

Non-GAAP earnings per share for fiscal 2026 are expected in the band of $3.64-$3.68. The consensus mark for fiscal 2026 earnings is pegged at $3.57 per share, which has remained unchanged over the past 60 days.

For the first quarter of fiscal 2026, Zscaler projects revenues between $772 million and $774 million. The Zacks Consensus Estimate for first-quarter fiscal 2026 revenues is pegged at $749.87 million, implying growth of 19.4% year over year.

Non-GAAP earnings per share are projected between 85 cents and 86 cents. The Zacks Consensus Estimate is pegged at 83 cents. The estimate has been revised upward by a penny over the past 30 days.

ZS Zacks Rank & Stocks to Consider

Currently, ZS carries a Zacks Rank #3 (Hold).

Amphenol APH, F5 FFIV and CrowdStrike CRWD are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. Amphenol, F5 and CrowdStrike sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Amphenol shares have gained 57.3% year to date. The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings is pegged at $3.02 per share, up by 4 cents over the past 30 days, indicating an increase of 59.8% from the year-ago quarter’s reported figure.

F5 shares have surged 22% year to date. The Zacks Consensus Estimate for F5’s full-year fiscal 2025 earnings is pegged at $15.38 per share, up by 0.8% over the past 30 days, indicating a gain of 15% from the year-ago quarter’s reported figure.

CrowdStrike shares have gained 21% year to date. The Zacks Consensus Estimate for CrowdStrike’s full-year 2026 earnings per share is pegged $3.54 per share, up by 4 cents over the past seven days, indicating a decline of 9.9% from the year-ago quarter’s reported figure.

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This article originally published on Zacks Investment Research (zacks.com).

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