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Zscaler exceeds its quarterly forecasts on the strength of cybersecurity demand

Zscaler's cloud-based security solutions and strong demand for them drove the company to beat Wall Street expectations for revenue and profit for its quarter on Thursday.

As digital threats became more sophisticated, enterprise spending on cyber-protection solutions increased. Zscaler’s flexible buying program helped it to sign multi-year platform agreements with larger enterprise clients.

The company has also raised its revenue outlook for the full year to approximately $3.28 to $3.30 Billion, up from its previous forecast of $3.27 to $3.28 Billion.

The company now anticipates a fiscal 2026 adjusted earning per share between $3.78 and $3.82 compared to the previous forecast of $3.64 - $3.68.

The shares of the company fell by more than 7% during extended trading, despite a rise of nearly 61% in this year.

RBC analysts stated in a report that, although the company raised its annual revenue forecasts by a small amount compared to the revenue growth in the first quarter.

Zscaler's revenue jumped 26% to $788.1M in the first quarter ending October 31. This was higher than analysts' estimates of $773.8M, according to LSEG data.

The adjusted earnings per share for the first quarter was 96 cents, which is above expectations of 86 cents.

Palo Alto Networks, a larger competitor, also increased its annual revenue forecasts last week and reported a rise in the first quarter.

Zscaler competes primarily in the market for secure access service edges (SASE), which combines network and security into one platform that connects users, devices, and applications anywhere.

SASE is one the fastest growing segments in cybersecurity, as cloud adoption and artificial intelligence continue to transform network architectures.

(source: Reuters)