Will Strong Revenue Outlook and Red Canary Deal Change Zscaler's (ZS) Investment Narrative?

• Earlier this month, Zscaler, Inc. announced full-year results for the period ended July 31, 2025, highlighting annual sales of US$2.67 billion and a narrowing net loss of US$41.48 million, alongside the completion of the Red Canary acquisition.
• The company also issued upbeat revenue guidance for fiscal 2026 and reported accelerating adoption of its AI and Zero Trust security solutions among Global 2000 and Fortune 500 customers.
• We’ll now explore what Zscaler’s improved revenue outlook and recent platform expansion could mean for its investment story.

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Zscaler Investment Narrative Recap

To be a shareholder in Zscaler, you need to believe that its leadership in Zero Trust and AI-driven security solutions will outweigh rising competition from legacy vendors and public cloud providers. The company’s new fiscal 2026 revenue guidance and improved profitability outlook boost confidence in its near-term growth story, but do not fundamentally alter the key short-term catalyst: accelerating large enterprise adoption of its expanding platform. The biggest concern remains pressure on margins as rivals invest heavily in their own security offerings.

Of the recent announcements, Zscaler’s acquisition of Red Canary stands out as most relevant. This deal brings new managed detection capabilities to Zscaler’s platform, supporting its efforts to win more share among Global 2000 and Fortune 500 customers and maintaining momentum in enterprise security adoption, a crucial driver for future returns.

However, investors should not overlook that, in contrast to these positive developments, intensifying price competition from public cloud and well-funded cybersecurity firms could...

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

Zscaler's narrative projects $4.7 billion in revenue and $139.8 million in earnings by 2028. This requires a 20.5% annual revenue growth rate and a $181.3 million increase in earnings from the current $-41.5 million.

Uncover how Zscaler's forecasts yield a $324.66 fair value, a 16% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members provided 9 individual fair value estimates for Zscaler stock, ranging widely from US$89.53 to US$324.66 per share. While these opinions reflect varied optimism and caution, ongoing margin pressure from new and existing competitors continues to weigh on the company’s long-term earnings potential.

Explore 9 other fair value estimates on Zscaler - why the stock might be worth less than half 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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