Zscaler (ZS 7.06%) stock is getting crushed on Wednesday following the company's latest quarterly report. The cybersecurity company's share price was down 30.7% as of 10:40 a.m. ET.
After yesterday's market close, Zscaler published results for the third quarter of its 2026 fiscal year -- which ended April 30. While the company reported sales and earnings that beat Wall Street's targets, the stock is still getting hit with a big pullback.
Image source: Getty Images.
Zscaler's fiscal Q3 results actually looked pretty strong
Zscaler posted non-GAAP (adjusted) earnings per share of $1.08 on sales of $850.48 million in fiscal Q3. Meanwhile, the average Wall Street analyst estimate had targeted per-share earnings of $1.01 on sales of $835.66 million.
Zscaler grew its revenue 25.4% year over year in the quarter, and the business closed out the period with annual recurring revenue of $3.525 billion -- also up roughly 25% annually. Free cash flow grew 14% year over year to hit $136 million.
NASDAQ: ZS
Key Data Points
Zscaler's guidance wasn't good enough for investors
Along with its fiscal Q3 report, Zscaler issued guidance for sales in the current quarter to come in between $875 million and $878 million -- suggesting year-over-year growth of roughly 22%. For comparison, the average analyst estimate had targeted revenue of $878.66 million in the quarter.
While the company's Q4 guidance came in below Wall Street's expectations, Zscaler actually narrowly raised its full-year sales target to between $3.3295 billion and $3.3225 billion -- up from previous guidance for sales between $3.309 billion and $3.322 billion. With the company's fiscal Q3 sales beat exceeding the shortfall on Q4 sales guidance, it's possible that the market is overreacting to Zscaler's recent quarterly report and outlook update.
