Zscaler (ZS) Stock Forecast & Price Target

Zscaler's revenue demonstrated significant growth, increasing 26% year-over-year to $788.1 million, surpassing management's guidance, and leading to an optimistic forecast for the full fiscal year with expected revenue of $3.282 billion to $3.301 billion. The company has shown impressive performance in its remaining performance obligations (RPO), growing 34.5% year-over-year, indicating a robust demand for its cloud-native cybersecurity solutions and a solid sales pipeline. Furthermore, Zscaler's non-GAAP operating income is projected to reach between $732 million and $740 million, complemented by a healthy non-GAAP gross margin of approximately 80%, affirming its strong profitability outlook in the SaaS sector.

Zscaler's stock experienced an approximate 8% decline in after-hours trading, attributed to disappointing guidance on new and organic growth metrics, as well as an operating income forecast for fiscal year 2026 that fell modestly below market expectations. The company's non-GAAP gross margin of 79.9% was slightly below the anticipated 80.1%, indicating challenges in balancing product optimization with profitability in the short term. Furthermore, structural issues, including high attrition rates in the sales force and reliance on cloud platform adoption, raise concerns about the company's ability to sustain growth and meet financial targets moving forward.