Zscaler (ZS) Stock Forecast & Price Target

Zscaler has demonstrated a strong financial performance with a 26% year-over-year increase in revenue, reaching $788.1 million, exceeding management's guidance. The company's annual recurring revenue (ARR) is projected to grow by 22.7%-23.3% year-over-year, with a forecasted range of $3.698 billion to $3.718 billion, indicating robust demand for its cloud-native cybersecurity solutions. Additionally, Zscaler’s rapid growth in remaining performance obligations (RPO), which rose by 34.5% year-over-year, reflects a healthy pipeline and an accelerating trend in customer commitments.

Zscaler's stock has experienced an approximately 8% decline in after-hours trading due to several key factors, including disappointing guidance for FY26 operating income and a lack of detailed commentary regarding organic growth metrics. The company's non-GAAP gross margin of 79.9% fell short of market expectations, reflecting a continued emphasis on product optimization for speed rather than margin improvement. Additionally, a higher than anticipated attrition rate within the sales force could disrupt ongoing operations, heightening concerns over the company's ability to sustain growth and profitability in the competitive cybersecurity landscape.