Zscaler Q3 Revenue Up 25% at $850.5M, Q4 Guidance Falls Short
EVR•Zscaler reported Q3 revenue of $850.5 million (up 25%), beating the $835.7 million consensus, and delivered adjusted EPS of $1.08 versus $1.01 expected. The company forecast Q4 revenue of $875–$878 million and EPS of $1.08–$1.09, prompting Evercore to cut its rating to ‘In Line’ and price target to $155.
1. Q3 Financial Performance
Zscaler’s third-quarter revenue rose 25% year-over-year to $850.5 million, surpassing the $835.7 million analyst consensus. Adjusted EPS of $1.08 also exceeded the $1.01 estimate, reflecting continued strength in cloud security subscriptions and Z-Flex sales momentum.
2. Q4 Guidance and Outlook
Management forecast fourth-quarter revenue of $875 million to $878 million, slightly below the consensus midpoint, and adjusted EPS of $1.08 to $1.09 at the lower end of expectations. The outlook implies deceleration in ARR and revenue growth, with early fiscal 2027 projections signaling a potential 700-basis-point slowdown.
3. Analyst Reactions and Price Target Cuts
Evercore cut its rating to ‘In Line’ from ‘Outperform’ and slashed its price target by $70 to $155, citing slowing net new logo additions and increased sales headwinds. At least 22 other firms also lowered price targets, with Morgan Stanley holding the lowest at $145 due to rising SASE competition concerns.
