Zscaler tanks 31% for worst day ever on 'prudent' guidance, sales shakeup
Zscaler's stock experienced a significant drop of over 30%, marking its worst day ever. This decline followed the company's disappointing guidance despite reporting better-than-expected fiscal third-quarter results. The cybersecurity firm is facing challenges including leadership changes and rising costs, prompting a cautious outlook for future revenue growth.
- ▪Zscaler's stock fell more than 30% on Wednesday, its worst day ever.
- ▪The company provided underwhelming guidance for fiscal year 2027, projecting 16% to 17% annual recurring revenue growth.
- ▪Zscaler expects quarterly revenue between $875 million and $878 million, slightly below analyst expectations.
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Zscaler's stock plummeted more than 30% on Wednesday for its worst day ever after issuing underwhelming guidance that overshadowed better-than-expected fiscal third-quarter results.The cybersecurity company guided for 16% to 17% year-over-year annual recurring revenue growth for the 2027 fiscal year, falling short of StreetAccount estimates. Zscaler expects $875 million to $878 million in revenue this quarter, coming up slightly short of the $878.6 million expected by FactSet.Zscaler projected ARR of $3.74 billion to $3.75 billion in FY2026, or year-over-year growth of approximately 24%.During the quarter, Zscaler said it lost two sales leaders, and finance chief Kevin Rubin said the company is taking a "prudent approach" to guidance amid the transitions.
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