Key Takeaways
- Q3 FY26 earnings announcement scheduled for Tuesday, May 26
- Analysts project $835.60 million in revenue (23% YoY growth) and $1.01 earnings per share (20% YoY increase)
- Options market indicates approximately 13% volatility expected following earnings release
- Shares have declined 19% in 2025, currently priced at $181.92 against analyst consensus target of $224.78
- Company disclosed Symmetry Systems acquisition to enhance AI-powered data security offerings
Zscaler (ZS) approaches its fiscal third quarter 2026 earnings announcement on Tuesday with shares trading at $181.92, representing a 19% year-to-date decline. Analyst consensus places the average price target at $224.78, suggesting approximately 23% potential upside from present valuations.
For the upcoming quarter, Wall Street anticipates revenue reaching $835.60 million, marking a 23% year-over-year expansion. Earnings per share projections stand at $1.01, representing a 20% improvement compared to the prior-year period.
The options market signals significant expected volatility. Data from TipRanks’ Options Tool indicates an implied movement of roughly 13% in either direction following the earnings announcement—substantially exceeding the company’s four-quarter average post-earnings fluctuation of 8.25%.
During the previous quarter, Zscaler delivered $815.8 million in revenue, reflecting 25.9% year-over-year growth while surpassing analyst projections. The company also provided above-consensus guidance for quarterly and annual EPS metrics.
The cybersecurity industry has demonstrated strength recently, with peer companies averaging approximately 10% gains over the past month. Zscaler has significantly outperformed this benchmark, rallying 35.6% during the same timeframe.
Recent peer results show mixed performance. Varonis Systems reported 26.9% year-over-year revenue expansion, exceeding estimates by 4.6%, with shares jumping 7.3% following the announcement. Meanwhile, Tenable achieved 9.6% revenue growth and beat expectations by 1.2%, yet experienced a 2.7% post-earnings decline.
Analyst Focus Areas
Market participants will scrutinize large enterprise contract momentum, expansion within the core zero-trust architecture, and whether emerging AI security solutions are generating substantial annual recurring revenue growth.
Company leadership has indicated AI Security ARR should surpass $500 million by fiscal year 2026’s conclusion. Non-seat-based offerings currently represent over 25% of new annual contract value—a metric analysts view as critical evidence of business model diversification.
UBS analyst Roger Boyd maintained a Buy rating with a $260 target ahead of results. He observed that April channel feedback showed improvement and expressed increased confidence in Zscaler’s second-half performance, citing RPO growth exceeding 30% across the previous four quarters.
Cantor Fitzgerald’s Jonathan Ruykhaver similarly maintained an Overweight stance with a $300 target. His recent channel checks proved encouraging, with merely 5% of partners indicating below-expectation performance.
Strategic Acquisition Update
Prior to the earnings release, Zscaler unveiled its intention to acquire Symmetry Systems, a specialist in identity mapping and AI data security. The transaction is anticipated to finalize shortly, although specific financial details remain undisclosed.
Morgan Stanley’s Meta Marshall retained an Equalweight rating alongside a $155 target following the announcement. While acknowledging the acquisition strengthens Zscaler’s AI and data security positioning, she emphasized investors seek more definitive proof that emerging business segments can expand rapidly enough to counterbalance decelerating growth in the core SASE division.
The Street maintains an overwhelmingly positive outlook on ZS stock. The consensus rating stands at Strong Buy, derived from 28 Buy recommendations and six Hold ratings issued over the trailing three months.
Zscaler’s Q3 FY26 results will be released after market close on Tuesday, May 26.
