Key Takeaways:
The cloud security company delivered adjusted earnings of $1.19 per share on $898 million in quarterly revenue, topping analyst projections of $1.09 and $877 million, respectively, according to LSEG data.
"The core competency we bring to the table is pretty unique, and as the adoption of AI agents happens, the market will recognize more and more that Zscaler is a critical player," CEO Jay Chaudhry said.
Revenue jumped 25 percent from about $719 million a year earlier. Annual recurring revenue rose 25 percent to $3.77 billion, beating a $3.75 billion StreetAccount estimate. The company reported a net loss of $3.37 million, or 2 cents per share, narrowing from a net loss of $17.58 million, or 11 cents per share, a year ago.
Shares rose about 8 percent in after-hours trading. The company guided first-quarter revenue of $935 million to $939 million and adjusted EPS of $1.15 to $1.16, both above consensus. For fiscal 2027, Zscaler projects revenue of $3.91 billion to $3.94 billion and adjusted EPS of $4.86 to $4.90.
Chaudhry told CNBC he is "very bullish" on the AI agent iteration, which he views as a potentially larger long-term annual recurring revenue opportunity. The tool, launched earlier this year, is gaining early momentum and should accelerate rapidly into 2028 and 2029, he said.
"It's a longer-term opportunity, but I think it's a fantastic opportunity with significant barriers to entry," Chaudhry said.
AI security bookings totaled $100 million over the past year and grew 50 percent sequentially quarter over quarter, Chaudhry said. The company's Zero Trust architecture and technology drove the quarter's beat.
Zscaler shares had fallen 20 percent this year before Thursday's report, even as cybersecurity peers including CrowdStrike and Palo Alto Networks notched new highs. Last quarter, the stock recorded its worst day ever after management took a "prudent approach" to guidance following two sales leader departures.
The earnings beat comes as cybersecurity stocks have surged this year on demand for tools to secure swarms of AI agents. The period has also been defined by sophisticated cyber models and agent-led attacks capable of bringing down entire systems.
The guidance raise points to management's expectation that AI security demand will accelerate. Investors will watch the Q1 earnings call for updated segment margins and ARR growth trajectory.
This article is for informational purposes only and does not constitute investment advice.
