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For the fiscal third quarter, Zscaler projects total revenues between $834 million and $836 million. The Zacks Consensus Estimate is pegged at $834.8 million, suggesting growth of 23.1% from the year-ago quarter.
Zscaler anticipates non-GAAP earnings per share between $1.00 and $1.01. The consensus mark for non-GAAP earnings has remained unchanged at $1.00 over the past 60 days, which indicates a 19% increase from the year-ago quarter’s level.
Image Source: Zacks Investment Research
Zscaler’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 12.42%.
Our proven model does not conclusively predict an earnings beat for Zscaler this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
ZS currently carries a Zacks Rank #3 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Factors Likely to Influence Zscaler’s Q3 Results
Zscaler’s third-quarter results are expected to benefit from its security and networking solutions, given the rising demand for AI security. Momentum in its Zero Trust Everywhere platform is likely to have driven larger platform deals and customer consolidation in the to-be-reported quarter. In the second quarter of fiscal 2026, the number of Zero Trust Everywhere customers surpassed 550, up sharply from 130 in the prior-year period.
Strong momentum with Global 2000 and Fortune 500 customers and $1 million ARR customers, driven by the ongoing digital transformation across organizations and the growing popularity of hybrid work, is likely to have been a key catalyst in the to-be-reported quarter. Zscaler’s growing enterprise penetration may have also been a tailwind in this quarter.
Another important growth driver in the to-be-reported quarter would have been its Z-Flex program, which is helping the company secure larger multi-year contracts. Introduced in the third quarter of fiscal 2025, the program generated more than $290 million in total contract value bookings in the second quarter of fiscal 2026, marking a strong 65% sequential increase.
Z-Flex allows customers to adopt multiple products gradually under a predictable pricing structure, making long-term platform adoption easier. This strategy not only increases customer stickiness but also improves revenue visibility.
Zscaler is expected to have gained from emerging opportunities from SAP RISE cloud migrations, which management believes could mirror the earlier Office 365-driven growth wave. However, several headwinds remain. Given that the overall IT budgets are still tight, continued scrutiny of large deals is likely to have offset the other gains in the to-be-reported quarter.
ZS’ Stock Price Performance & Valuation
Year to date, Zscaler shares have plunged 23.5%, underperforming the Zacks Security industry’s gain of 31%. Compared to its peers, ZS stock has also underperformed other cybersecurity solution providers, including Fortinet, Inc. (FTNT - Free Report) , CrowdStrike Holdings, Inc. (CRWD - Free Report) and Palo Alto Networks, Inc. (PANW - Free Report) . Year to date, shares of Fortinet, CrowdStrike and Palo Alto Networks have soared 63.1%, 38.2% and 37.3%, respectively.
Zscaler YTD Price Return Performance
Image Source: Zacks Investment Research
Now, let’s look at the value Salesforce offers investors at the current levels. Zscaler stock is trading at a discount with a forward 12-month P/S of 7.16X compared with the industry’s 14.65X.
Zscaler Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
ZS stock also trades at a discount relative to Fortinet, Palo Alto Networks and CrowdStrike. At present, Fortinet, Palo Alto Networks and CrowdStrike have P/S multiples of 11.78, 15.87 and 26.13, respectively.
Investment Thesis on Zscaler Stock
Zscaler continues to strengthen its competitive position through aggressive innovation and targeted investments. The company’s three major growth pillars — AI Security, Zero Trust Everywhere and Data Security Everywhere — have now collectively crossed $1 billion in ARR. These businesses are growing faster than the company’s overall revenue base.
AI Security is emerging as a particularly strong opportunity. Management expects AI Security ARR to surpass $500 million in fiscal 2026 as enterprises adopt solutions like AI Guard and agentic operations. Meanwhile, Zero Trust Everywhere has already added more than 550 enterprises, surpassing the company’s original 390 adoption target much earlier than expected. Data Security Everywhere also offers significant upsell potential, as many customers are still using only a limited number of modules.
Zscaler appears to be gaining an early advantage in AI security, one of the fastest-growing areas in enterprise software. The company processed nearly 1 trillion AI transactions in calendar year 2025, highlighting the accelerating adoption of AI applications among businesses. To address emerging risks such as prompt injection and model poisoning, Zscaler launched AI Guard, which is currently being evaluated by large enterprises.
Its Agentic Operations platform is also gaining traction and could become a major contributor to AI Security ARR in fiscal 2026. The integration of Red Canary’s AI capabilities further strengthens Zscaler’s AI-powered security operations platform and improves its positioning in the enterprise cybersecurity market.
Conclusion: Hold ZS Stock Ahead of Q3 Results
Zscaler remains well-positioned for long-term growth, supported by rising demand for AI security and strong adoption of its Zero Trust platform. The company is also benefiting from larger enterprise deals and expanding customer relationships. However, tight IT budgets and continued scrutiny of large deals amid ongoing macroeconomic uncertainties may limit near-term upside.
While ZS stock looks reasonably valued compared with peers, it is advisable to wait for greater clarity from the upcoming quarterly results before taking a more aggressive position.
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Zscaler's Q3 Earnings Countdown: Buy, Hold or Sell the Stock?
Key Takeaways
Zscaler, Inc. (ZS - Free Report) is scheduled to report third-quarter fiscal 2026 results on May 26, after market close.
For the fiscal third quarter, Zscaler projects total revenues between $834 million and $836 million. The Zacks Consensus Estimate is pegged at $834.8 million, suggesting growth of 23.1% from the year-ago quarter.
Zscaler anticipates non-GAAP earnings per share between $1.00 and $1.01. The consensus mark for non-GAAP earnings has remained unchanged at $1.00 over the past 60 days, which indicates a 19% increase from the year-ago quarter’s level.
Image Source: Zacks Investment Research
Zscaler’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 12.42%.
Zscaler, Inc. Price, Consensus and EPS Surprise
Zscaler, Inc. price-consensus-eps-surprise-chart | Zscaler, Inc. Quote
What the Zacks Model Unveils for ZS
Our proven model does not conclusively predict an earnings beat for Zscaler this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
ZS currently carries a Zacks Rank #3 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Factors Likely to Influence Zscaler’s Q3 Results
Zscaler’s third-quarter results are expected to benefit from its security and networking solutions, given the rising demand for AI security. Momentum in its Zero Trust Everywhere platform is likely to have driven larger platform deals and customer consolidation in the to-be-reported quarter. In the second quarter of fiscal 2026, the number of Zero Trust Everywhere customers surpassed 550, up sharply from 130 in the prior-year period.
Strong momentum with Global 2000 and Fortune 500 customers and $1 million ARR customers, driven by the ongoing digital transformation across organizations and the growing popularity of hybrid work, is likely to have been a key catalyst in the to-be-reported quarter. Zscaler’s growing enterprise penetration may have also been a tailwind in this quarter.
Another important growth driver in the to-be-reported quarter would have been its Z-Flex program, which is helping the company secure larger multi-year contracts. Introduced in the third quarter of fiscal 2025, the program generated more than $290 million in total contract value bookings in the second quarter of fiscal 2026, marking a strong 65% sequential increase.
Z-Flex allows customers to adopt multiple products gradually under a predictable pricing structure, making long-term platform adoption easier. This strategy not only increases customer stickiness but also improves revenue visibility.
Zscaler is expected to have gained from emerging opportunities from SAP RISE cloud migrations, which management believes could mirror the earlier Office 365-driven growth wave. However, several headwinds remain. Given that the overall IT budgets are still tight, continued scrutiny of large deals is likely to have offset the other gains in the to-be-reported quarter.
ZS’ Stock Price Performance & Valuation
Year to date, Zscaler shares have plunged 23.5%, underperforming the Zacks Security industry’s gain of 31%. Compared to its peers, ZS stock has also underperformed other cybersecurity solution providers, including Fortinet, Inc. (FTNT - Free Report) , CrowdStrike Holdings, Inc. (CRWD - Free Report) and Palo Alto Networks, Inc. (PANW - Free Report) . Year to date, shares of Fortinet, CrowdStrike and Palo Alto Networks have soared 63.1%, 38.2% and 37.3%, respectively.
Zscaler YTD Price Return Performance
Image Source: Zacks Investment Research
Now, let’s look at the value Salesforce offers investors at the current levels. Zscaler stock is trading at a discount with a forward 12-month P/S of 7.16X compared with the industry’s 14.65X.
Zscaler Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
ZS stock also trades at a discount relative to Fortinet, Palo Alto Networks and CrowdStrike. At present, Fortinet, Palo Alto Networks and CrowdStrike have P/S multiples of 11.78, 15.87 and 26.13, respectively.
Investment Thesis on Zscaler Stock
Zscaler continues to strengthen its competitive position through aggressive innovation and targeted investments. The company’s three major growth pillars — AI Security, Zero Trust Everywhere and Data Security Everywhere — have now collectively crossed $1 billion in ARR. These businesses are growing faster than the company’s overall revenue base.
AI Security is emerging as a particularly strong opportunity. Management expects AI Security ARR to surpass $500 million in fiscal 2026 as enterprises adopt solutions like AI Guard and agentic operations. Meanwhile, Zero Trust Everywhere has already added more than 550 enterprises, surpassing the company’s original 390 adoption target much earlier than expected. Data Security Everywhere also offers significant upsell potential, as many customers are still using only a limited number of modules.
Zscaler appears to be gaining an early advantage in AI security, one of the fastest-growing areas in enterprise software. The company processed nearly 1 trillion AI transactions in calendar year 2025, highlighting the accelerating adoption of AI applications among businesses. To address emerging risks such as prompt injection and model poisoning, Zscaler launched AI Guard, which is currently being evaluated by large enterprises.
Its Agentic Operations platform is also gaining traction and could become a major contributor to AI Security ARR in fiscal 2026. The integration of Red Canary’s AI capabilities further strengthens Zscaler’s AI-powered security operations platform and improves its positioning in the enterprise cybersecurity market.
Conclusion: Hold ZS Stock Ahead of Q3 Results
Zscaler remains well-positioned for long-term growth, supported by rising demand for AI security and strong adoption of its Zero Trust platform. The company is also benefiting from larger enterprise deals and expanding customer relationships. However, tight IT budgets and continued scrutiny of large deals amid ongoing macroeconomic uncertainties may limit near-term upside.
While ZS stock looks reasonably valued compared with peers, it is advisable to wait for greater clarity from the upcoming quarterly results before taking a more aggressive position.