Zscaler sees annual revenue above estimates on strength in cybersecurity demand

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(Reuters) -Zscaler forecast annual revenue above Wall Street estimates on Tuesday, betting on robust demand for its cybersecurity services as businesses upscale infrastructure to accommodate AI, sending its shares up 3% in extended trading.

A rise in cybercrime and hacks, coupled with the rapid adoption of generative artificial intelligence, have prompted companies to increase investments in cybersecurity to safeguard their digital infrastructure and sensitive data.

Zscaler, which primarily competes in the fast-growing secure access secure edge (SASE) market, closed its $675 million acquisition of Red Canary in early August, expanding its capabilities and positioning itself more competitively in the AI-driven security market.

“We are rapidly expanding our AI security portfolio to address the emerging risks of AI models and applications,” CEO Jay Chaudhry said in a statement.

Zscaler expects fiscal 2026 revenue in the range of $3.27 billion to $3.28 billion, compared with analysts’ average estimate of $3.21 billion, according to data compiled by LSEG.

For the first quarter, it forecast revenue between $772 million and $774 million, ahead of the estimate of $750.7 million.

The company’s revenue stood at $719.2 million during the fourth quarter ended July 31, while analysts’ estimated $706.9 million.

It posted adjusted earnings of 89 cents per share for the quarter, also above expectations of 80 cents.

(Reporting by Juby Babu in Mexico City; Editing by Shilpi Majumdar)