• The cybersecurity supplier turned in stable outcomes for its fiscal fourth quarter.

  • Zscaler is seeing robust momentum in newer vectors, resembling AI safety.

  • A more in-depth look factors to income development accelerating within the new fiscal yr.

  • 10 shares we like higher than Zscaler ›

Whereas Zscaler (NASDAQ: ZS) inventory has had a robust run this yr, the momentum shifted after the cybersecurity firm reported its fiscal 2025 fourth-quarter outcomes following the shut of buying and selling Tuesday. Although the interval’s numbers had been good, and administration issued upbeat steering, the inventory sank 4% in Wednesday buying and selling. Nevertheless, even after the pullback, the inventory continues to be up by about 50% yr so far.

Let’s take a more in-depth have a look at the corporate’s outcomes and steering to see if Wednesday’s dip has created a shopping for alternative.

Whereas endpoint cybersecurity firms like CrowdStrike (NASDAQ: CRWD) and Palo Alto Networks (NASDAQ: PANW) are inclined to get extra consideration from buyers, Zscaler has carved out an necessary area of interest in a fast-growing a part of the cybersecurity sector. It is centered on zero belief safety, which is constructed round the concept no particular person person or machine ought to robotically be trusted, even when it was beforehand discovered to be reliable. That signifies that all customers’ entry to numerous platforms should be verified, licensed, after which repeatedly revalidated.

The rise of synthetic intelligence (AI) and AI brokers, in the meantime, has solely added to the complexity of the cyberthreat panorama. That is resulting in development in newer areas for Zscaler, together with AI Safety, Zero Belief In all places, and Knowledge Safety In all places, which mixed to exceed $1 billion in annual recurring income (ARR) in its fiscal This autumn, which ended July 31. The corporate can also be engaged on options to safe agent-to-agent and agent-to-application communications.

All of this helped Zscaler obtain sturdy income development. Within the quarter, its income climbed 21% yr over yr to $719.2 million, simply surpassing administration’s prior steering for income of between $705 million and $707 million. Adjusted earnings per share (EPS) climbed to $0.89 from $0.72 a yr earlier. That was additionally effectively forward of the corporate’s $0.79 to $0.80 forecast.

Zscaler generated working money movement of $250.6 million and free money movement of $171.9 million. It ended the interval with $3.6 billion in money and short-term investments on its steadiness sheet and $1.7 billion in debt within the type of convertible notes. It additionally accomplished the acquisition of managed detection and response specialist Pink Canary for an undisclosed sum proper after the quarter ended, in order that money place is more likely to come down.



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