Zscaler – 2025-11-28 - Increase Confidence 8/10

ZS – Increase in Days/Weeks

Zscaler posted Q1 2026 revenue of $788M, beating estimates by over 1.8%, while non-GAAP EPS of $0.96 exceeded expectations by 11.4%. The company raised full-year guidance and reported explosive 80% YoY growth in its AI Security segment, surpassing its annual target three quarters early.

Why This Matters

Zscaler’s cloud-native security platform is gaining structural momentum as enterprises accelerate zero trust and AI-driven security adoption; the combination of robust ARR (26% YoY) and RPO growth (35% YoY) reflects strong forward visibility and customer expansion, making near-term revenue acceleration highly probable even in a high-valuation environment.

Key Insights

• Revenue & Guidance: Q1 revenue $788M (+25.5% YoY), full-year revenue guidance raised to $3.282–$3.301B (+22.8%–23.5% YoY)
• News Impact: AI Security ARR >80% YoY growth and Red Canary acquisition enhance threat detection capabilities, reinforcing product leadership
• Risk/Offset: High forward P/E of 70.8 and debt/equity of 92.65% increase sensitivity to growth deceleration or rate hikes

Practical Implications

• Bull Case: Continued AI security strength and ZFlex program momentum ($175M TCQ, +70% QoQ) could drive re-rating toward $280+ in 2–3 weeks
• Bear Case: Valuation compression risk if broader market turns risk-off or Q2 growth (23% YoY expected) shows signs of plateauing
• Confidence: 8/10 – Strong fundamentals, upward guidance revision, and strategic M&A support near-term upside

Prediction: increase

Reference:

• https://finance.yahoo.com/news/zscaler-inc-zs-q1-2026-050053887.html
• https://finance.yahoo.com/news/zscaler-inc-zs-acquires-red-035627324.html
• https://www.marketscreener.com/quote/stock/ZSCALER-INC-42379366/news/Earnings-Flash-ZS-ZSCALER-INC-Posts-Q2-Revenue-647-9M-vs-FactSet-Est-of-634-4M-49249141/