Zscaler reports its fiscal third-quarter results after US market close Tuesday, with Wall Street watching for signs that the cloud security provider’s pivot into AI agent governance can justify a valuation reset after a turbulent 12 months.
The Zscaler share price (NASDAQ: ZS) has climbed 36% over the past month but remains 45% below its 52-week high of $336.99 from November last year. Analysts maintain a Moderate Buy consensus rating with an average price target of $261.26, implying roughly 51% upside from current levels. The earlier fear that had hit cybersecurity names earlier in the year due to AI erosion has subsided somewhat, with buyers returning.
Analyst consensus expectations for the quarter call for an EPS of $1.01, coming on revenues of $853.7million, a healthy 23.1% Y/Y sales growth rate.
Top Australian Brokers
- Pepperstone - Top Australian broker - Read our review
- eToro - Invest in ASX and international shares - Read our review
What to watch
The headline number to watch is guidance, particularly commentary around the Symmetry Systems acquisition announced on 21 May. The deal adds what Zscaler calls an “access graph” that maps how identities, applications, and data sources connect across enterprise environments.
Management is positioning this technology as foundational for governing AI agent communication at scale. That framing matters because it signals a shift from defending traditional network perimeters to managing a new layer of machine-to-machine access risk as enterprises deploy autonomous AI systems.
Investors will also want clarity on how the acquisition affects near-term margin trajectories. Zscaler has been investing heavily in product development, and adding Symmetry’s capabilities mid-quarter could put pressure on operating leverage in the short term.
Revenue composition will be scrutinised as well. The company’s Zero Trust Browser reached phase two on 29 April, adding protection against malicious extensions, phishing, unmanaged devices, and accidental data exposure through generative AI tools. How quickly that product line is being adopted, and whether it’s driving new customer wins or deepening existing relationships, will inform the growth outlook.
On the partnership front, Zscaler won the 2026 Google Cloud Partner of the Year Award for Security on 21 April. That recognition suggests momentum in enterprise integrations, but investors will want to hear whether that translates into material deal flow or simply validates the existing roadmap.
The street is looking for:
- Earnings per share: $1.01, up 19% from $0.84 in the year-ago quarter
- Revenue: $835.7 million, reflecting 23.1% year-on-year growth
- EPS estimate range: $0.94 to $1.07 across 42 analysts
- Revenue estimate range: $831.5 million to $853.6 million
For the full fiscal year, consensus points to earnings of $4.03 per share on revenue of $3.32 billion, representing 22.87% and 24.04% growth respectively compared to the prior year.
Expectations shift
The stock’s recent rally suggests some optimism is already priced in, but the path from here depends in large part on the guidance.
On the upside, stronger-than-expected revenue guidance tied to AI security demand could reignite growth expectations. If management articulates a clear timeline for Symmetry Systems integration and explains how the combined platform creates competitive separation, that could support the bullish case for a valuation multiple expansion.
Margins will matter too. If Zscaler can show that its recent product investments are translating into operating leverage rather than simply adding cost, that would address one of the concerns flagged by analysts who have trimmed price targets in recent months.
On the downside, any signs of elongating sales cycles or pricing pressure in the core Zero Trust portfolio could weigh on the stock.
Price Targets
Guidance will be the key variable. Rosenblatt cut its price target to $223 from $250 on 18 May while maintaining a Buy rating, citing valuation concerns rather than fundamental deterioration. That suggests the bar for a positive reaction may be higher than usual, with investors looking for evidence that the company can accelerate growth rather than simply maintain its current trajectory.
The Symmetry Systems deal also introduces execution risk. If integration costs or timeline uncertainty cloud the near-term outlook, that could trigger profit-taking despite the longer-term strategic rationale.
