To The Moon

$Zscaler Inc.(ZS)$ is scheduled to release its fiscal fourth-quarter 2025 earnings report on Tuesday, September 2, 2025, after the market closes. As a leader in cloud security, the company's performance is a key indicator for the broader cybersecurity and enterprise IT spending landscape.

Revenue: The consensus revenue estimate is approximately $707 million. This figure is at the high end of Zscaler's own guidance range of $705 million to $707 million, which it provided in the previous quarter.

Earnings Per Share (EPS): There is some variation in EPS estimates, but the consensus is for a non-GAAP EPS of around $0.80. It is important to note that some sources cite a small GAAP loss per share, which is common for growth companies that invest heavily. The focus for investors will be on the non-GAAP EPS, which excludes certain one-time expenses.

Summary of Zscaler's Fiscal Q3 2025 Earnings

Zscaler reported a strong fiscal Q3 2025, with key metrics exceeding analyst expectations. The company demonstrated robust growth and a focus on profitability, which was well-received by the market.

Key Financial Highlights:

Revenue: Zscaler reported revenue of $678.0 million, a 23% year-over-year increase, and a beat on analyst consensus.

Billings: Calculated billings grew by 25% year-over-year to $784.5 million, a positive sign for future revenue.

Annual Recurring Revenue (ARR): The company’s ARR reached approximately $2.9 billion, marking a 23% year-over-year growth for the third consecutive quarter.

Profitability: While Zscaler still reported a GAAP net loss, its non-GAAP net income and operating margin showed strength. Non-GAAP income from operations was $146.7 million, representing a healthy 22% of revenue.

Lessons Learned from the Guidance

The guidance provided by Zscaler's management during the Q3 earnings call was a key driver of investor optimism and offered several important lessons about the company's strategy and the broader cybersecurity market.

Key Lessons from the Guidance:

The "Platform Play" is Winning: Zscaler’s success is increasingly driven by "platform-wide deals" where customers adopt a broader range of its Zero Trust solutions. The company's focus on its three strategic growth categories—Zero Trust Everywhere, Data Security Everywhere, and Agentic Operations—is paying off. This "land and expand" model is evidenced by the growth in customers with over $1 million in ARR and its strong Dollar-Based Net Retention Rate of 114%. The lesson is that customers are moving away from piecemeal security solutions toward a consolidated, comprehensive platform.

AI is a Strategic Growth Driver: Zscaler's guidance and commentary emphasized the role of AI in its future growth. The company is leveraging its massive data footprint to build new AI-driven security operations solutions and Copilots. The acquisition of Red Canary further reinforces this commitment, adding a talented team and agentic AI technology to enhance its platform. The lesson here is that Zscaler is not just a participant in the AI trend but is actively integrating it into its core product offerings to create a competitive advantage.

Efficiency and Profitability are Now a Priority: The company's strong "Rule of 52" performance (24% year-to-date revenue growth combined with a 28% free cash flow margin) demonstrated that it is achieving strong growth while also improving its financial discipline. Management's guidance to maintain profitability and scale its operations efficiently was a crucial lesson, reassuring investors that the company is transitioning from a pure growth-at-all-costs model to a more mature, profitable business. This focus on efficiency is particularly important in a cautious economic environment where enterprises are scrutinizing their IT spending.

In summary, Zscaler's Q3 2025 report confirmed that the company's platform-centric, AI-powered strategy is gaining traction. The guidance signals a clear path to continued growth and profitability, even amid ongoing macroeconomic uncertainty, by focusing on expanding its product offerings and disciplined cost management.

Key Metrics for Investors to Watch:

Revenue and Billings: These are the primary indicators of Zscaler's top-line growth. While revenue is a direct measure of business performance, billings—which represent sales to customers and include upfront payments and long-term contracts—are a strong forward-looking indicator of future revenue growth. Investors will be looking for Zscaler to meet or exceed its previously provided guidance for both metrics. Analysts are expecting revenue of around $707 million.

Annual Recurring Revenue (ARR): As a subscription-based software company, Zscaler's ARR is a crucial metric that shows the predictable, recurring revenue it generates from its customers. A strong ARR number indicates that the company is successfully landing new customers and retaining its existing ones.

Profitability and Margin: Zscaler has been investing heavily in its sales, marketing, and R&D to capitalize on the growing demand for its Zero Trust security platform. While the company has historically not been GAAP profitable, investors will be closely watching its non-GAAP operating margin and free cash flow margin. Any sign of improving margins would indicate that Zscaler is gaining operating leverage and scaling its business efficiently. The company's ability to demonstrate a clear path to profitability will be a major factor in investor sentiment.

Dollar-Based Net Retention Rate (DBNRR): This metric measures the percentage of revenue from existing customers that the company retains over a period. A DBNRR of over 100% signifies that existing customers are spending more on Zscaler's services, whether by adding more users or adopting new products. This metric is a powerful testament to the value of Zscaler's platform and its "land and expand" sales strategy.

Forward Guidance: The most important part of the earnings report will be the company's outlook for fiscal Q1 2026 and the full fiscal year 2026. Given the current economic environment, any commentary on IT spending trends, sales cycles, and the competitive landscape will be scrutinized. A conservative outlook could lead to a sell-off, while a strong, confident forecast could drive the stock higher.

Zscaler (ZS) Price Target

Based on 43 analysts from Tiger Brokers offering 12 month price targets for Zscaler in the last 3 months. The average price target is $316.76 with a high forecast of $385.00 and a low forecast of $215.00. The average price target represents a 112.96% change from the last price of $280.42.

Opportunities for Short-Term Trading Post-Earnings

Zscaler's stock is known for its volatility following earnings announcements. This can present opportunities for short-term traders.

Positive Surprise: If Zscaler beats expectations on key metrics like revenue, billings, and ARR, and provides an upbeat outlook for the next quarter, the stock could experience a significant rally. This would signal that the company is successfully navigating the macroeconomic environment and its platform continues to see strong demand.

Negative Surprise: A miss on revenue or a weak outlook could lead to a sharp sell-off. Concerns about slower enterprise spending, increased competition, or a deceleration in growth would likely be met with a negative market reaction.

Trading the Narrative: Even if the headline numbers are in line with expectations, the post-earnings conference call can be a source of volatility. Comments from management on the performance of new products (such as its AI-driven security solutions), the integration of recent acquisitions, or customer sentiment can heavily influence a stock's short-term movement.

Zscaler, Inc. (ZS) had 30-Day Historical Volatility (Close-to-Close) of 0.2972 for 2025-08-27. ZS’s volatility have remained pretty stable, but I would think that we need to monitor and see how the post earnings and outlook guidance might trigger an increase in this volatility.

Technical Analysis - Exponential Moving Average (EMA)

ZS have been trading sideways for quite some time, and we can see that the bears are still in control but we are seeing some potential daily uptrend effort by ZS, and if we can get a strong guidance from ZS, as well as a significant increase in its ARR, we could see a pretty good price surge post earnings.

So investors would be looking for a continued improvement in the company's non-GAAP operating margin and free cash flow as it scales, and I would be monitoring whether we can take position on Friday or Next Tuesday before its earnings.

Summary

Zscaler (ZS) is scheduled to release its fiscal Q4 2025 earnings after the market closes on Tuesday, September 2, 2025. Investors and traders will be watching several key metrics closely to assess the company's performance and future outlook.

Key metrics to watch include:

Revenue and Billings: Analysts expect revenue of approximately $707 million, so beating this figure will be a positive sign. Billings, a measure of future sales, will also be closely watched for signs of continued customer demand.

Annual Recurring Revenue (ARR): As a subscription-based business, a healthy ARR growth rate is crucial for Zscaler.

Profitability: Investors will be looking for a continued improvement in the company's non-GAAP operating margin and free cash flow as it scales.

Forward Guidance: Management's outlook for fiscal Q1 2026 will be the most important factor. Any positive or negative commentary on enterprise spending and the competitive landscape will heavily influence the stock's short-term direction.

A positive earnings surprise or a strong outlook could trigger a rally, while a miss or cautious guidance could lead to a sell-off, offering potential short-term trading opportunities.

Appreciate if you could share your thoughts in the comment section whether you think ZS could continued to show improvement in its non-GAAP operating margin, and also a strong free cash flow.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.