Zscaler tops quarterly estimates on strong cybersecurity demand

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(Reuters) -Zscaler beat Wall Street estimates for quarterly revenue and profit on Thursday, driven by strong demand for its cloud and artificial intelligence security solutions.

Enterprise spending on cyber protection solutions has increased as digital threats have gotten more sophisticated. Zscaler’s flexible purchasing program has helped it sign larger, multi-year platform deals with enterprise clients.

The company also increased its full-year revenue forecast to about $3.28 billion to $3.30 billion, from its prior outlook of $3.27 billion to $3.28 billion.

It now expects fiscal 2026 adjusted earnings per share of $3.78 to $3.82, compared with prior forecast of $3.64 to $3.68.

However, shares of the company, which have risen nearly 61% this year, fell more than 7% in extended trading.

RBC analysts said in a note that although the company lifted its annual forecasts, the increase in revenue outlook was smaller than the first-quarter revenue beat.

Zscaler posted a 26% jump in revenue to $788.1 million in the first quarter ended October 31, topping analysts’ average estimate of $773.8 million, according to data compiled by LSEG.

Adjusted earnings per share was 96 cents for the first quarter, above estimates of 86 cents.

Last week, larger rival Palo Alto Networks also raised its annual forecasts and reported an increase in first-quarter revenue.

Zscaler primarily competes in the secure access service edge (SASE) market, which combines networking and security into a single platform to connect users, devices and applications from anywhere.

SASE is one of the fastest-growing segments of cybersecurity as cloud adoption, driven by the artificial intelligence boom, continues to transform network security architectures.

(Reporting by Anhata Rooprai in Bengaluru; Editing by Vijay Kishore)