Key Takeaways
- Q3 FY26 earnings for Zscaler scheduled for Tuesday, May 26
- Analyst consensus projects $835.60 million in revenue (23% YoY growth) and $1.01 EPS (20% YoY increase)
- Options market indicates approximately 13% volatility expected following results
- Shares have declined 19% in 2025, currently at $181.92, while analyst targets average $224.78
- Company revealed Symmetry Systems acquisition to strengthen AI-driven data protection offerings
As Zscaler (ZS) prepares to unveil its Q3 FY26 financial results on Tuesday, shares have experienced a 19% decline year-to-date, with the stock hovering near $181.92. Analysts maintain an average price objective of $224.78, suggesting potential upside of approximately 23% from present levels.
The Street anticipates quarterly revenue reaching $835.60 million, marking a 23% climb compared to the year-ago period. Earnings per share projections stand at $1.01, representing a 20% annual improvement.
The options market signals heightened volatility expectations. Data from TipRanks’ Options Tool reveals an implied movement of roughly 13% following the earnings announcement — significantly exceeding the company’s four-quarter average post-earnings swing of 8.25%.
During the previous quarter, Zscaler delivered revenue of $815.8 million, a 25.9% year-over-year surge that surpassed projections, while management issued optimistic guidance for both quarterly and annual earnings.
The cybersecurity industry has demonstrated solid performance recently, with comparable companies averaging gains of approximately 10% over the trailing month. Zscaler has significantly outperformed this benchmark, surging 35.6% during the identical timeframe.
Recent peer results show mixed outcomes: Varonis Systems achieved 26.9% annual revenue expansion, exceeding forecasts by 4.6%, with shares rallying 7.3% afterward. Meanwhile, Tenable’s 9.6% revenue growth beat estimates by 1.2%, yet the stock declined 2.7% following its report.
Key Focus Areas for Investors
Market participants will scrutinize large-scale enterprise transaction momentum, expansion within the foundational zero-trust architecture, and whether emerging AI-focused security solutions are generating substantial annual recurring revenue increases.
Executives have indicated that AI Security ARR should surpass $500 million by fiscal year-end 2026. Non-seat-based offerings now represent over 25% of fresh annual contract value — a metric analysts are monitoring as evidence of business model evolution.
UBS analyst Roger Boyd maintained his Buy recommendation with a $260 valuation ahead of results. His April channel research showed improved sentiment, increasing confidence in the company’s second-half trajectory, underpinned by RPO growth exceeding 30% across the last four quarters.
Cantor Fitzgerald’s Jonathan Ruykhaver similarly affirmed his Overweight stance, preserving a $300 target. His recent partner surveys revealed strength, with merely 5% of channel partners indicating below-target performance.
Strategic Acquisition Announcement
Immediately preceding the earnings release, Zscaler disclosed its intention to purchase Symmetry Systems, a specialist in identity mapping and AI data security. The transaction is anticipated to conclude soon, although specific financial details remain undisclosed.
Morgan Stanley’s Meta Marshall retained an Equalweight view with a $155 target following the announcement. While acknowledging the acquisition advances Zscaler’s ambitions in AI and data protection, she emphasized that investors seek more definitive proof that emerging product lines can expand rapidly enough to counterbalance deceleration in the core SASE business.
Analyst sentiment toward ZS remains predominantly positive, with a Strong Buy consensus derived from 28 Buy recommendations and six Hold ratings issued over the previous three months.
The company will release results following Tuesday’s market close on May 26.
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