Zscaler Shares Fall as FY2027 Growth Guidance Draws Attention

Zscaler (NASDAQ:ZS) shares fell 4.2% in pre-market trading after the cloud cybersecurity company reported fiscal fourth-quarter 2026 results above analyst expectations but issued guidance indicating slower growth in fiscal 2027.

Fourth-quarter revenue reached $898.2 million, an increase of 25% from the same period a year earlier and above the consensus estimate of $877 million. Adjusted earnings per share were $1.19, compared with analyst expectations of $1.09.

Attention subsequently shifted to the company’s outlook for the new financial year, with Zscaler forecasting slower revenue and annual recurring revenue growth.

Zscaler Forecasts Slower FY2027 Growth

For fiscal 2027, Zscaler projected revenue and annual recurring revenue growth of between 16.6% and 17.5%, compared with growth of approximately 25% during fiscal 2026.

The outlook represents a moderation in the company’s expected growth rate following the expansion recorded during the previous financial year.

The broader U.S. equity market offered a relatively neutral backdrop, with both the S&P 500 and Nasdaq recording marginal gains.

Company Announces Workforce Restructuring

Alongside its financial results, Zscaler announced a restructuring programme that is expected to reduce its global workforce by approximately 3%.

The company expects to recognise charges of between $30 million and $33 million associated with the restructuring, with most of those costs anticipated during the first half of fiscal 2027.

Zscaler also reported a fourth-quarter free cash flow margin of 6.8%, compared with 16% in the previous quarter. The company accelerated purchases of data-centre equipment ahead of expected increases in hardware costs.

Shares Decline Following Earnings Release

The pre-market decline followed an initial positive reaction to Zscaler’s quarterly results before attention shifted towards its fiscal 2027 guidance.

The company’s shares have traded between $114.62 and $336.99 over the past 52 weeks.

The market response follows a similar reaction after Zscaler’s third-quarter report in May, when quarterly results exceeded expectations but guidance became a focus for investors. Cybersecurity peer Palo Alto Networks has also recently experienced a share-price decline following results that exceeded quarterly expectations alongside a more cautious near-term outlook.

Zscaler stock price