Cybersecurity firm Zscaler issues FY2027 revenue growth guidance below estimates, triggering its largest single-day stock decline.
Zscaler’s stock plunged 31% Wednesday after the company issued conservative fiscal 2027 guidance, overshadowing stronger-than-expected third-quarter results. The cybersecurity firm projected annual recurring revenue growth of 16% to 17%, below StreetAccount estimates, and forecast $875 million to $878 million in revenue for the current quarter, slightly under FactSet’s $878.6 million expectation.
The company also reported the departure of two sales leaders and warned of rising capital expenditures, which will increase by 200 basis points as a percentage of revenues in FY2027 due to memory shortages and higher costs. Zscaler guided for $3.74 billion to $3.75 billion in ARR for FY2026, reflecting 24% year-over-year growth.
CEO Jay Chaudhry acknowledged a disciplined approach to guidance but emphasized strong long-term opportunities in cybersecurity. The stock’s decline reflects broader investor concerns over software growth and AI-related spending pressures.