Zscaler Shares Drop 14.9% After Q4 EPS Beat and Billings Miss
Zscaler shares plunged 14.9% after Q4 revenue and adjusted EPS topped forecasts, but billings missed significantly and management disclosed that Red Canary's contribution may mask sluggish standalone net new ARR growth. The company also issued Q1 EPS guidance above estimates, while its full-year EPS outlook beat analysts' forecasts.
1. Q4 Results Exceed Expectations
Zscaler reported Q4 revenue and adjusted EPS above analyst forecasts, demonstrating continued top-line strength even as core profitability improved on a year-over-year basis.
2. Bullish EPS Guidance Outpaces Estimates
The company issued Q1 EPS guidance that surpassed consensus and raised its full-year EPS outlook beyond prior benchmarks, signaling confidence in upcoming profitability.
3. Red Canary Acquisition Raises ARR Questions
Management broke out the financial contribution from its Red Canary acquisition, suggesting that the strong results may partly reflect acquired revenue and that standalone net new ARR growth could be more modest.
4. Shares Plunge on Mixed Metrics
Investors reacted to the billings shortfall and uncertainty around organic growth by sending the stock down 14.9%, marking one of the largest single-day declines in recent trading.