Zscaler Reports Slowing Growth Amid AI Boom
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 5 days ago
0mins
Source: NASDAQ.COM
- Revenue Growth Forecast: Zscaler anticipates revenue growth of 16% to 17% in fiscal 2027, a stark decline from the 44% annualized growth rate over the past five years, indicating a potential loss of investor confidence amid the AI boom.
- Ongoing Losses: Despite a net profit margin of -1.6% in Q3 FY26, Zscaler reported only 25% year-over-year revenue growth, highlighting its unprofitability and significantly decelerating growth, which may pressure its stock price.
- Competitive Market Pressure: With a price-to-sales ratio of 6.6, Zscaler lags behind competitors like CrowdStrike and Fortinet, reflecting market concerns about its future profitability, and traditional valuation metrics such as P/E ratios are not applicable given its current financial state.
- Customer Expansion and Profitability Potential: While Zscaler is making strides in attracting new customers and expanding existing relationships, the timeline for achieving profitability remains uncertain, and the slowing revenue growth backdrop may dampen investor expectations for its future performance.
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Analyst Views on ZS
Wall Street analysts forecast ZS stock price to rise
30 Analyst Rating
24 Buy
6 Hold
0 Sell
Strong Buy
Current: 150.420
Low
260.00
Averages
325.62
High
390.00
Current: 150.420
Low
260.00
Averages
325.62
High
390.00
About ZS
Zscaler, Inc. is a cloud security company. The Company has developed a platform incorporating core security functionalities needed to enable fast and secure access to cloud resources based on identity, context and an organization's policies. Its Zscaler Zero Trust Exchange is a cloud-native platform that securely connects users, devices, applications and workloads, including artificial intelligence (AI) agents, without relying on hub-and-spoke network architecture and firewall-centric security. It delivers its solutions using a software-as-a-service (SaaS) business model and sells subscriptions to customers to access its cloud platform, together with related support services. Its services include Zscaler Internet Access (ZIA), Zscaler Private Access (ZPA), and Zscaler Digital Experience (ZDX). ZIA provides secure access to externally managed applications, including SaaS applications and internet destinations, regardless of device, location or network.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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See More
