Zscaler, Inc. (ZS) reported its first-quarter fiscal 2026 earnings, delivering adjusted earnings per share of $0.96, which surpassed analyst estimates of $0.86. Revenue reached $788.1 million, a 26% year-over-year increase and exceeding expectations of $773.26 million. Annual Recurring Revenue (ARR) grew to $3.2 billion, up 26% from the previous year, while deferred revenue jumped 32% to $2.35 billion.
Despite these strong results, Zscaler's stock tumbled 9% in after-hours trading to $266.90, erasing gains from the regular session. The decline was attributed to investor expectations for even stronger performance, given the stock's year-to-date gain of over 60%. CEO Jay Chaudhry emphasized the company's growth, stating, "Our outstanding Q1 results demonstrate the strong demand we are experiencing for our Zero Trust and AI Security platform."
Zscaler raised its full-year fiscal 2026 guidance, projecting revenue between $3.28 billion and $3.30 billion and adjusted EPS of $3.78 to $3.82. However, concerns over valuation emerged, with the forward price-to-earnings ratio at 76, well above the sector median of 22. Technical analysis indicated a potential double-top pattern, suggesting further downside risk to $250.
