Zscaler Inc. (NASDAQ:ZS) shares fell more than 31% on Wednesday after the cloud security company shared softer-than-expected forward guidance, drawing attention from a modest fiscal third quarter earnings beat.
For the fiscal fourth quarter, Zscaler projected revenue of $875 million to $878 million, slightly below consensus expectations of $879 million
The company also guided non-GAAP earnings per share of $1.08 to $1.09. More significantly, management’s preliminary fiscal 2027 outlook called for revenue and annual recurring revenue (ARR) growth of 16% to 17%, a clear step down from current growth rates and below prior Street expectations of roughly 19% to 20%. For fiscal Q3, Zscaler reported adjusted earnings per share of $1.08, above analyst estimates of $1.01.
Revenue came in at $850.5 million, above the $835.5 million expected, while ARR reached $3.53 billion, above the $3.51 billion consensus. Revenue rose 25% year over year, with ARR also increasing 25% to $3.53 billion. Net new ARR totaled $166 million in the quarter, including contributions from the Red Canary acquisition.