Zscaler Q4 Earnings Beat: Will Strong Guidance Lift the Stock Higher?

Zscaler ZS 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.ZS’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 14.7%.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.After the stronger-than-expected third-quarter results, Zscaler raised its guidance for fiscal 2025. The stronger-than-expected results and raised guidance for fiscal 2025 are likely to lift ZS stock higher. Zscaler shares have gained 57.4% year to date, outperforming the Zacks Security industry’s growth of 10.1%.Zscaler, Inc. Price, Consensus and EPS Surprise Zscaler, Inc. price-consensus-eps-surprise-chart | Zscaler, Inc. QuoteZscaler’s Q3 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.Operating Details of ZSThe 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. The Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $3.19 billion, suggesting growth of 19.8% from fiscal 2025.Non-GAAP earnings per share for fiscal 2026 are expected in the band of $3.64-$3.68. The consensus mark for fiscal 2026 earnings is pegged at $3.57 per share, which has remained unchanged over the past 60 days.For the first quarter of fiscal 2026, Zscaler projects revenues between $772 million and $774 million. The Zacks Consensus Estimate for first-quarter fiscal 2026 revenues is pegged at $749.87 million, implying growth of 19.4% year over year.Non-GAAP earnings per share are projected between 85 cents and 86 cents. The Zacks Consensus Estimate is pegged at 83 cents. The estimate has been revised upward by a penny over the past 30 days.ZS Zacks Rank & Stocks to ConsiderCurrently, ZS carries a Zacks Rank #3 (Hold).Amphenol APH, F5 FFIV and CrowdStrike CRWD are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. Amphenol, F5 and CrowdStrike sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Amphenol shares have gained 57.3% year to date. The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings is pegged at $3.02 per share, up by 4 cents over the past 30 days, indicating an increase of 59.8% from the year-ago quarter’s reported figure.F5 shares have surged 22% year to date. The Zacks Consensus Estimate for F5’s full-year fiscal 2025 earnings is pegged at $15.38 per share, up by 0.8% over the past 30 days, indicating a gain of 15% from the year-ago quarter’s reported figure.CrowdStrike shares have gained 21% year to date. The Zacks Consensus Estimate for CrowdStrike’s full-year 2026 earnings per share is pegged $3.54 per share, up by 4 cents over the past seven days, indicating a decline of 9.9% from the year-ago quarter’s reported figure.Higher. Faster. Sooner. Buy These Stocks NowA small number of stocks are primed for a breakout, and you have a chance to get in before they take off.At any given time, there are only 220 Zacks Rank #1 Strong Buys. On average, this list more than doubles the S&P 500. We’ve combed through the latest Strong Buys and selected 7 compelling companies likely to jump sooner and climb higher than any other stock you could buy this month.You'll learn everything you need to know about these exciting trades in our brand-new Special Report, 7 Best Stocks for the Next 30 Days.Download the report free now >>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 Amphenol Corporation (APH): Free Stock Analysis Report F5, Inc. (FFIV): Free Stock Analysis 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