Zscaler (ZS +7.44%) stock crashed this week after the company published results for the third quarter of its 2026 fiscal year — which ended April 30. The cybersecurity specialist’s share price moved 18.3% lower compared to where it stood at the end of the previous week’s trading. Meanwhile, the S&P 500 rose 1.8%, and the Nasdaq Composite was up 2.6%.
Zscaler released its fiscal Q3 report on May 26, and the stock got hit with big sell-offs despite sales and earnings for the period coming in ahead of the average Wall Street analyst estimates. The company’s share price is now down roughly 49% over the last year.
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Zscaler stock got crushed despite solid Q3 results
Zscaler recorded a non-GAAP (adjusted) profit of $1.08 per share on sales of $850.48 million in fiscal Q3. Sales were up 25.4% year over year and beat the average analyst estimate by $14.82 million, and adjusted earnings per share topped the average forecast by $0.07. With the company’s fiscal Q3 report, management also increased its full-year sales and annual recurring revenue (ARR) targets for fiscal 2026 — but there was a catch.
Today’s Change
(7.44%) $9.67
Current Price
$139.71
Key Data Points
Market Cap
$23B
Day’s Range
$130.38 – $139.91
52wk Range
$114.63 – $336.99
Volume
379.4K
Avg Vol
3.9M
Gross Margin
76.29%
Zscaler expects some significant growth deceleration
Zscaler has raised its ARR target for fiscal 2026 to between $3.740 billion and $3.749 billion — up from previous guidance for ARR between $3.73 billion and $3.745 billion. Meanwhile, revenue is now projected to come in between $3.3295 billion and $3.3325 billion — up from its previous target for sales between $3.309 billion and $3.322 billion.
ARR is projected to grow roughly 24% in fiscal 2026, and sales are now projected to be up between 24.6% and 24.7%. On the other hand, management said that it expected ARR and revenue to grow between 16% and 17% in fiscal 2027. While the company anticipates some substantial deceleration for growth, the stock could be worth a look for risk-tolerant investors following the recent pullback.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Zscaler. The Motley Fool has a disclosure policy.
