Zscaler Analysts Boost Their Forecasts After Better-Than-Expected Earnings

Zscaler reported strong Q3 results, exceeding revenue and earnings estimates with $678.03 million and $0.84 per share, respectively, driven by adoption of its Zero Trust Exchange platform. While Q4 revenue guidance of $705-707 million is slightly below the $707.61 million estimate, the company raised its full-year 2025 revenue and earnings outlook to $2.659-2.661 billion and $3.18-$3.19 per share, respectively, leading analysts at Rosenblatt and Needham to raise their price targets despite the stock's 1% dip.

Analysis

Zscaler Inc. demonstrated robust financial performance in its third quarter, reporting revenue of $678.03 million, surpassing the consensus estimate of $666.86 million, and adjusted earnings of 84 cents per share, which exceeded analyst expectations of 75 cents. This outperformance was attributed by CEO Jay Chaudhry to increasing customer adoption of Zscaler's expanding Zero Trust Exchange platform, designed to enhance security while reducing operational costs. While the company's fourth-quarter revenue guidance of $705 million to $707 million is marginally below the $707.61 million estimate at its upper end, Zscaler significantly raised its full-year 2025 outlook. The company now projects full-year revenue between $2.659 billion and $2.661 billion, up from previous estimates around $2.65 billion, and anticipates full-year adjusted earnings of $3.18 to $3.19 per share, a notable increase from the $3.07 per share consensus. Despite these positive results and upgraded guidance, Zscaler shares experienced a minor 1% decline to $251.11 post-announcement; however, analysts from Rosenblatt and Needham reiterated Buy ratings and substantially increased their price targets to $315 and $310, respectively, signaling continued confidence in the company's growth trajectory within the cybersecurity sector.

Key Decisions for Investors

• Investors should consider Zscaler's strong Q3 results and raised full-year 2025 guidance as key positive indicators, reinforcing its growth narrative and leadership in the Zero Trust cybersecurity market.
• Evaluate the minor post-earnings share price dip as a potential opportunity, weighing the slightly cautious Q4 revenue guidance against the significantly improved full-year outlook and strong analyst price target increases from firms like Rosenblatt and Needham.
• Focus on Zscaler's ability to meet its Q4 projections and sustain customer adoption of its Zero Trust Exchange platform, as these factors will be critical for validating the bullish long-term thesis and continued market outperformance.