Overview
- Zscaler posted a strong fiscal third quarter on May 26, with about $850.5 million in revenue, $1.08 adjusted EPS, and roughly $3.5 billion in annual recurring revenue while recording a $13.9 million GAAP loss.
- Management raised full‑year revenue and adjusted EPS modestly but reduced full‑year free‑cash‑flow margin guidance and gave preliminary FY27 ARR/revenue growth of 16–17%, a pace well below market expectations.
- Executives disclosed the departures of two senior sales leaders and said the company is increasing capital spending to lock in memory, storage and processor capacity, which the CFO said is driving the weaker cash‑flow outlook.
- Markets reacted sharply over May 27–28 with the stock plunging more than 20–30% in sessions, several analysts cutting price targets and some downgrading the shares, and a securities‑litigation firm opening an investor inquiry.
- Zscaler continues to push an AI‑security growth narrative with AI Protect bookings above $100 million and a pending Symmetry Systems deal to boost data and identity security, and investors will be watching new‑logo wins, sales stability, and Symmetry’s close for signs of recovery.