Zscaler Shares Plunge 25.8% After Q3 Beat But Q4 Revenue Guidance Miss
ZS•Zscaler reported adjusted Q3 earnings of $1.08 per share on $850 million in revenue, topping analyst estimates, but issued Q4 revenue guidance of $875 million to $878 million, shy of consensus. Shares plunged 25.8%, sparking at least 15 price-target cuts and dragging Palo Alto Networks and CrowdStrike lower.
1. Q3 Earnings and Revenue Beat
Zscaler delivered adjusted fiscal third-quarter earnings of $1.08 per share on $850 million in revenue, exceeding consensus estimates. The beat was driven by strong demand for cloud security solutions and AI-driven offerings.
2. Guidance Miss and Outlook Impact
Guidance for the fiscal fourth quarter was set at $875 million to $878 million in revenue, below the consensus of $878.5 million, reflecting recent sales leadership transitions. Management maintained a constructive full-year outlook but acknowledged near-term headwinds.
3. Analyst Reactions and Price-Target Cuts
At least 15 firms cut their price targets following the guidance shortfall, including a reduction from $223 to $200 at one major firm. Of 45 covering analysts, 36 still hold buy or better ratings, with one sell recorded.
4. Market and Peer Response
Shares tumbled 25.8% to $137.03, erasing quarterly gains and pushing the stock toward a three-year low near $114.62. Palo Alto Networks and CrowdStrike shares slid about 3% and 2.5% respectively, while options volume surged to 59,000 contracts, led by the weekly 5/29 120-strike puts.
