New York, May 27, 2026, 07:05 (EDT)
- Zscaler is set to drop 21.5% before the bell after the company said its fourth-quarter revenue outlook came in below Wall Street targets.
- The company topped forecasts for fiscal third-quarter revenue and adjusted profit, and lifted parts of its full-year outlook.
- The drop was notable as the market was firmer, with Nasdaq 100 futures up 0.45% earlier Wednesday.
Zscaler shares sank in U.S. premarket trading Wednesday after the company guided revenue for the fourth quarter below Wall Street’s targets. That weaker outlook took the focus off a better-than-expected quarter. A delayed MarketWatch quote showed the stock at $144.84 as of 4:02 a.m. EDT, off 21.5% from the $184.60 close.
The drop is notable because it happened before the Nasdaq’s main session started and even as markets were in risk-on mode. Nasdaq says premarket trading goes from 4:00 a.m. to 9:30 a.m. Eastern, ahead of the 9:30 a.m. to 4:00 p.m. regular hours. Reuters said Nasdaq 100 futures were up 0.45% at 4:42 a.m. ET, driven by AI momentum.
Zscaler shares came under pressure after the company forecast fiscal fourth-quarter revenue of $875 million to $878 million, just short of the $878.6 million LSEG consensus. Investors sold on the weaker outlook for the next quarter, not the just-finished one. Projected adjusted profit landed above estimates at $1.08 to $1.09 a share, compared with the $1.03 LSEG figure.
Zscaler, Inc. said third-quarter revenue was up 25% from a year ago to $850.5 million for the quarter ended April 30. Annual recurring revenue climbed 25% as well, hitting $3.525 billion. Free cash flow came in at $136.0 million, up 14%.
Zscaler, Inc. reported a GAAP net loss of $13.9 million, compared to a $4.1 million loss in the same quarter last year. Non-GAAP earnings came in at $1.08 per share, beating the $1.01 analysts had forecast, according to Barron’s.
Zscaler CEO Jay Chaudhry called the company “ideally positioned as the cybersecurity platform for the AI era,” saying threats from frontier AI models and compromised AI agents are fueling demand. CFO Kevin Rubin said ARR rose 25%—21% without Red Canary—and that non-GAAP operating margin hit a record 23%. Zscaler, Inc.
Zscaler lifted its full-year revenue target to about $3.33 billion and is now guiding for $4.10 to $4.11 in adjusted earnings per share. But the company dropped its free-cash-flow margin forecast to a range of 22.8% to 23.3%, down from the previous 26.5% to 27% figure, pointing to higher capex.
Zscaler is moving some planned fiscal 2027 data-center spending into this quarter as memory, storage and processor costs climb, Rubin said on the earnings call. He added that two sales leaders have left. Management is now taking what Rubin called a “prudent approach,” noting these leadership changes can have “some disruptive nature” for the sales team. The Motley Fool
Zscaler is still running up against bigger names. According to Reuters, the company is battling larger players like Palo Alto Networks in the Secure Access Service Edge (SASE) space, where networking and security are offered together for users, devices and apps. Google wrapped up its $32 billion buyout of Wiz in March, putting another heavyweight into the mix for cloud and AI security.
Zscaler is making another move on the AI-security front. The company said last week it will buy Symmetry Systems, a specialist in access-graph tech that tracks links among users, apps, and data inside organizations. CEO Chaudhry said the plan is to use Symmetry to manage large-scale agent-to-app and agent-to-agent traffic.
But the bear case is clear. If slower sales turnover hits deal flow, if hardware costs force capital spending higher, or if buyers wait on cloud-security deals in a competitive market, Zscaler’s higher full-year earnings forecast might not support the shares. The company flagged macro issues, AI risks, sales cycles, rivals, and execution as factors that could make actual numbers miss the outlook.
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