Why Is Zscaler (ZS) Up 12.6% Since Last Earnings Report?

It has been about a month since the last earnings report for Zscaler (ZS). Shares have added about 12.6% in that time frame, outperforming the S&P 500.But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Zscaler due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Zscaler, Inc. before we dive into how investors and analysts have reacted as of late.Zscaler Q4 Earnings and Revenues Surpass EstimatesZscaler reported fourth-quarter fiscal 2025 non-GAAP earnings of 89 cents per share, which beat the Zacks Consensus Estimate by 11.3%. Moreover, the bottom line increased 23.6% year over year, driven by higher revenues and efficient cost management.Zscaler’s fourth-quarter fiscal 2025 revenues of $719.2 million beat the Zacks Consensus Estimate by 1.9% and exceeded management’s guidance of $705-$707 million. The top line grew 21% year over year, demonstrating the company’s strong market position, fueled by heightened customer commitments to the Zero Trust Exchange platform and a growing demand for its artificial intelligence (AI)-based solutions.Zscaler’s Q4 Top-Line DetailsDuring the fiscal fourth quarter, Zscaler’s calculated billings increased 32% year over year to $1.2 billion.Region-wise, the Americas accounted for 55% of revenues, while the EMEA contributed 29%. The Asia Pacific and Japan made up the remaining 16%.In the fiscal fourth quarter, ZS added multiple large customers across all its offerings, including ZIA, ZPA and ZDX.Remaining Performance Obligations (RPO), representing Zscaler’s committed non-cancelable future revenues, were $5.8 billion as of July 31, which increased 31% year over year. The current RPO is approximately 46% of the total RPO.At the end of the quarter, the company had 664 customers with $1 million or higher annualized recurring revenues (ARR). Zscaler’s customer count for ARR of more than $100,000 reached 3,494 at the end of the fourth quarter.Zscaler’s Operating DetailsThe non-GAAP gross profit increased 18.5% year over year to $570.1 million. The non-GAAP gross margin contracted 190 basis points (bps) on a year-over-year basis to 79.3%.Total non-GAAP operating expenses, accounting for 57.2% of revenues, increased 16.3% year over year to $411.2 million.The non-GAAP operating income was $158.9 million compared with the year-ago quarter’s $127.5 million. The non-GAAP operating margin expanded 60 basis points year over year to 22.1%.Zscaler’s Balance Sheet & Cash FlowAs of July 31, 2025, Zscaler had $3.57 billion in cash, cash equivalents and short-term investments compared with $3.01 billion as of April 30, 2025.The company generated operating and free cash flows of $250.6 million and $171.9 million, respectively, during the fourth quarter. In fiscal 2025, Zscaler generated operating and free cash flows of $972.5 million and $726.7 million, respectively.Zscaler Initiates Guidance for FY26Zscaler initiated its outlook for fiscal 2026. The company forecasts revenues in the range of $3.265-$3.284 billion. Non-GAAP earnings per share for fiscal 2026 are expected in the band of $3.64-$3.68.For the first quarter of fiscal 2026, Zscaler projects revenues between $772 million and $774 million. Non-GAAP earnings per share are projected between 85 cents and 86 cents.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in fresh estimates.The consensus estimate has shifted -70.73% due to these changes.VGM ScoresAt this time, Zscaler has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock has a grade of F on the value side, putting it in the bottom 20% quintile for value investors.Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Zscaler has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Performance of an Industry PlayerZscaler is part of the Zacks Security industry. Over the past month, CrowdStrike Holdings (CRWD), a stock from the same industry, has gained 21%. The company reported its results for the quarter ended July 2025 more than a month ago.CrowdStrike reported revenues of $1.17 billion in the last reported quarter, representing a year-over-year change of +21.3%. EPS of $0.93 for the same period compares with $1.04 a year ago.CrowdStrike is expected to post earnings of $0.94 per share for the current quarter, representing a year-over-year change of +1.1%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for CrowdStrike. Also, the stock has a VGM Score of F.Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Zscaler, Inc. (ZS): Free Stock Analysis Report CrowdStrike (CRWD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks