Zscaler Shares Drop 9% Despite Earnings Beat and Raised Guidance
Zscaler reported stronger-than-expected fiscal Q1 2026 earnings, with adjusted EPS of $0.96 surpassing the $0.86 consensus and revenue reaching $788.1 million against estimates of $773.26 million. Annual Recurring Revenue grew 26% year-over-year to $3.2 billion, while deferred revenue jumped 32% to $2.35 billion.
The company raised its full-year fiscal 2026 guidance, projecting revenue between $3.28 billion and $3.30 billion and adjusted EPS in the range of $3.78 to $3.82. Despite these positive metrics, shares tumbled 9% in after-hours trading, signaling investor disappointment with the results relative to heightened expectations.
CEO Jay Chaudhry emphasized the company's momentum, citing strong demand for its Zero Trust and AI Security platform. The stock's 60% year-to-date gain prior to the earnings release may have contributed to profit-taking as investors reassessed valuation.
