Does Zscaler's (ZS) Improving Revenue Guidance Offset Ongoing Losses in Its Growth Strategy?

• Zscaler, Inc. recently reported its earnings results for the year ended July 31, 2025, with annual revenue reaching US$2.67 billion, up from US$2.17 billion a year earlier, and provided guidance projecting revenue of up to US$3.28 billion for the next fiscal year.
• An interesting point is that while Zscaler continued to report a net loss both for the quarter and the full year, the company still managed to narrow its loss per share and continues to forecast strong revenue growth into 2026.
• We'll explore how Zscaler's updated revenue outlook for fiscal 2026 could influence its investment narrative going forward.

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Zscaler Investment Narrative Recap

Zscaler is a fast-growing cloud security provider, but to be a shareholder, you need to believe the company can turn strong recurring revenue growth into sustainable profitability, despite losses and high competition. The recent results, featuring improved revenue and narrowed annual net loss, help reinforce the core growth catalyst of cloud and AI adoption, though the company’s path to profitability remains the most important short-term test. The latest earnings do not materially change the main risk: margin pressure from larger, bundled security vendors.

Among recent announcements, Zscaler’s guidance for fiscal 2026 revenue growth to as much as US$3.28 billion stands out, directly aligning with the short-term catalyst of accelerated enterprise demand for Zero Trust security and its AI-powered modules. This sizeable forecast suggests management’s ongoing confidence in both product relevance and the company’s ability to capture a larger share of new security spending, even as competition intensifies and pricing power is tested at scale.

Yet, with so much optimism about growth, it’s important for investors to be mindful of the risk that Zscaler’s expanding platform and rapid rollout of new products may lead to persistent high operating expenses and an extended path to profitability...

Read the full narrative on Zscaler (it's free!)

Zscaler's narrative projects $4.5 billion in revenue and $144.4 million in earnings by 2028. This requires 20.6% annual revenue growth and a $183.2 million increase in earnings from the current -$38.8 million.

Uncover how Zscaler's forecasts yield a $316.75 fair value, a 15% upside to its current price.

Exploring Other Perspectives

Nine members of the Simply Wall St Community estimate Zscaler’s fair value between US$89.53 and US$358.09, with opposing views across the range. While community estimates vary widely, many are watching how competitive pressures could constrain Zscaler’s revenue growth and impact longer-term returns.

Explore 9 other fair value estimates on Zscaler - why the stock might be worth as much as 30% more than the current price!

Build Your Own Zscaler Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Zscaler research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Zscaler research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Zscaler's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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