Zscaler (ZS) Delivers +25% Revenue Growth and Record Margins in Q3
Key Takeaways
- Revenue rose 25% year-over-year to $850.5 million for the third quarter of fiscal 2026 ended April 30, 2026.
- Annual recurring revenue (ARR) grew 25% to $3.525 billion, with net new ARR of $166 million during the quarter.
- Non-GAAP operating margin reached a record 23%, up from 22% a year ago, with non-GAAP operating income of $195.8 million.
- Non-GAAP earnings per share (EPS) increased to $1.08 from $0.84 in the prior-year quarter.
- The company raised its full-year fiscal 2026 guidance for revenue, ARR, and non-GAAP profitability.
- GAAP results showed a net loss of $13.9 million, or $0.09 per share, compared to a $4.1 million loss a year earlier.
Why These Results Matter
Zscaler delivers cloud security solutions centered on its Zero Trust Exchange platform. The company’s fiscal year ends July 31, making the third quarter a key indicator of momentum heading into the final period. In my view, investors closely monitor these results for signs of sustained demand in cybersecurity amid rising AI-related threats and enterprise digital transformation. Strong ARR growth and improving profitability can influence valuation multiples and future guidance expectations in a competitive sector.
Breaking Down the Reported Results
Revenue reached $850.5 million, a 25% increase from $678.0 million in the third quarter of fiscal 2025. ARR expanded 25% to $3.525 billion. Non-GAAP operating income totaled $195.8 million, or 23% of revenue, compared with $146.7 million, or 22%, a year earlier. Non-GAAP net income rose to $177.9 million, or $1.08 per diluted share, versus $136.8 million, or $0.84 per share, previously. GAAP net loss widened slightly to $13.9 million, or $0.09 per share. Deferred revenue grew 25% to $2.477 billion. The company beat consensus estimates on both revenue and non-GAAP EPS and raised full-year fiscal 2026 guidance across key metrics. From what I see, these figures highlight consistent execution even as the business scales.
Market Reaction and Investor Sentiment
Following the release after market close on May 26, 2026, shares initially reacted negatively in after-hours trading. Investors appeared to focus on the pace of growth relative to elevated expectations and forward commentary, even as the company delivered record margins and raised guidance. Sentiment heading into the report had been constructive given the company’s positioning in AI security, though post-print volatility reflected typical earnings uncertainty in high-growth technology names. I’m watching this closely as the market digests the details.
Using AI Tools to Compare Performance
When analyzing results like these, I often turn to Tickeron’s AI Screener to see how ZS stacks up against peers on fundamentals and technical trends. It provides a quick way to filter for similar growth profiles and margin trajectories across the software sector. This helps put the quarter in broader context without relying solely on manual comparisons.
Forward Outlook and Key Factors to Monitor
Zscaler raised its full-year fiscal 2026 revenue guidance to a range of approximately $3.3295 billion to $3.3325 billion, implying growth of 24.6% to 24.7%. ARR guidance was lifted to $3.740 billion to $3.749 billion. Non-GAAP operating income is now expected at $755 million to $757 million. The company also provided fourth-quarter fiscal 2026 targets, including revenue of $875 million to $878 million.
Investors will watch execution on the recently announced acquisition of Symmetry Systems and partnerships involving frontier AI models. Demand signals in public sector and international markets, along with the impact of new product initiatives such as Project AI-Guardian, remain important. Margin expansion trends and free cash flow generation will be monitored closely as the company balances growth investments with profitability targets.
Disclaimer
The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer.
ZS sees MACD Histogram just turned negative
ZS saw its Moving Average Convergence Divergence Histogram (MACD) turn negative on May 27, 2026. This is a bearish signal that suggests the stock could decline going forward. Tickeron's A.I.dvisor looked at 45 instances where the indicator turned negative. In of the 45 cases the stock moved lower in the days that followed. This puts the odds of a downward move at .
Technical Analysis (Indicators)
Bearish Trend Analysis
The 10-day RSI Indicator for ZS moved out of overbought territory on May 27, 2026. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 39 similar instances where the indicator moved out of overbought territory. In of the 39 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Momentum Indicator moved below the 0 level on May 27, 2026. You may want to consider selling the stock, shorting the stock, or exploring put options on ZS as a result. In of 73 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
ZS moved below its 50-day moving average on June 03, 2026 date and that indicates a change from an upward trend to a downward trend.
The 10-day moving average for ZS crossed bearishly below the 50-day moving average on June 08, 2026. This indicates that the trend has shifted lower and could be considered a sell signal. In of 16 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where ZS declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
Bullish Trend Analysis
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. of 53 cases where ZS's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where ZS advanced for three days, in of 352 cases, the price rose further within the following month. The odds of a continued upward trend are .
ZS may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
The Aroon Indicator entered an Uptrend today. In of 244 cases where ZS Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Fundamental Analysis (Ratings)
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (8.475) is normal, around the industry mean (16.759). P/E Ratio (0.000) is within average values for comparable stocks, (65.612). Projected Growth (PEG Ratio) (1.351) is also within normal values, averaging (1.733). ZS has a moderately low Dividend Yield (0.000) as compared to the industry average of (0.023). P/S Ratio (6.211) is also within normal values, averaging (143.169).
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating slightly worse than average price growth. ZS’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. ZS’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 93, placing this stock worse than average.
Notable companies
Industry description
Market Cap
High and low price notable news
Volume
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
Advertisement
General Information
an antivirus & cloud security platform
Industry ComputerCommunications
Advertisement