Zscaler (ZS) Stock: Earnings Preview and What Analysts Are Watching

Key Takeaways

Table of Contents

Zscaler delivers fiscal Q4 results September 3 following market close
Jefferies lifted its ZS price target to $220 from $200 with a Buy rating maintained
Wall Street consensus projects 24.2% year-over-year Q4 ARR growth
Last quarter’s guidance disappointed with FY2027 ARR growth projected at only 16-17%
Management’s forward outlook will drive stock movement more than Q4 results

Zscaler is set to release fiscal fourth-quarter earnings this evening, September 3, following the market close. Shares are currently trading near $172.73, sliding more than 3% during today’s session.

Zscaler, Inc., ZS

The dynamics heading into this print are noteworthy. When Zscaler last reported quarterly results, the company posted respectable metrics—25% gains in both revenue and ARR during Q3, alongside record-setting adjusted operating margins. Yet the market punished the stock. The reason? Management’s guidance, particularly the FY2027 ARR growth forecast calling for merely 16-17%, which rattled investor confidence.

That conservative projection has established a lower baseline for tonight’s report. Whether executives choose to elevate those expectations will determine the market’s response.

Jefferies analyst Joseph Gallo boosted his ZS price objective to $220 from $200 earlier this week while reaffirming his Buy stance. He characterized the FY2027 ARR guidance as “very reasonable” and highlighted Q1 as potentially positioned for organic ARR acceleration, supported in part by favorable federal spending dynamics.

Gallo observed that Wall Street consensus anticipates approximately $220 million in net new ARR for Q4, though some market participants are targeting figures closer to $245 million. His proprietary research indicates achieving the higher threshold may prove challenging.

Valuation Multiple Remains Compelling

From a valuation perspective, ZS currently commands approximately 41 times forward-twelve-month free cash flow. This compares favorably against Palo Alto Networks at 54 times and Fortinet at 48 times, positioning Zscaler as the more attractively priced alternative among large-cap cybersecurity names entering tonight’s announcement.

The company’s remaining performance obligation—effectively its contracted revenue backlog—expanded 30% during Q3 to reach $6.5 billion. This metric deserves attention in tonight’s release. Sustained bookings growth exceeding reported revenue suggests accelerating growth momentum ahead.

Competitive Landscape Raises Expectations

Recent earnings from CrowdStrike and Palo Alto Networks demonstrated that artificial intelligence is catalyzing increased cybersecurity expenditures. CrowdStrike delivered its strongest net new ARR growth rate on record, with management projecting FY2027 net new ARR growth 630 basis points higher than previous levels. That announcement propelled shares toward record territory.

Palo Alto disclosed Q4 adjusted earnings per share of $1.02 on $3.41 billion in revenue, surpassing analyst estimates of $0.98 and $3.35 billion respectively. Despite the beat, PANW shares tumbled over 9% as market participants scrutinized the Q1 forecast.

This dynamic—exceeding expectations yet declining nonetheless—merits consideration for Zscaler’s report tonight. Simply beating consensus figures likely won’t suffice to drive shares higher.

The Jefferies analyst emphasized that Zscaler’s SecOps and Agentic AI opportunities remain one to two quarters from materializing as fundamental catalysts. Q1 FY2027, rather than Q4 FY2026, may represent when the growth narrative truly begins materializing.

Zscaler’s most recent closing price stood at $172.73.

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