AI-driven security demand and a broader product mix could sustain durable growth, while current guidance leaves meaningful monetization upside.
The growth reset, execution strain, and premium valuation make delivery—not market demand—the key risk to ZS’s equity story.
JPM argues AI is compressing the vulnerability discovery-to-exploitation cycle and pushing cyber further into C-suite/board-level business continuity budgets, supporting spend across SASE, Zero Trust, next-gen endpoint, exposure management and incident resp...
The stock caught a bid as cyber security names rallied following an increase in PHP2Shell attacks.
The company's stock rose significantly due to critical vulnerabilities identified in PHP, which highlighted the need for enhanced cybersecurity solutions.
Semis +2.2% outperformed as SPCX’s guide, SMCI’s preannouncement, and some bullish Anthropic comments by Gerstner on CNBC had semi vibes feeling better than they have been over the past couple weeks. Software +1.8% was led by cyber on an AI-found PHP flaw (...
Stifel's C3Q26 VAR survey was the strongest in its 35-quarter history, with 80% of VARs growing year-over-year, all Tier-1 contacts at or above plan, and record pull-ins with record low push-outs.
Cyber budgets remain healthy, with most expecting 5–10% growth in CY26 and a plurality expecting over 10% in CY27.
Zscaler is among Stifel's preferred names in the cybersecurity sector.
AI is already creating pipeline at PANW/CRWD, but the real purchasing inflection is expected in C4Q26/CY27. Preferred names: CRWD, PANW, NET, OKTA and ZS; FTNT likely another upside print, CHKP more subdued.
The company's performance was mixed in the cybersecurity VAR call.
The company's new long-term model implies a significant ARR CAGR, with potential for higher growth if AI reaccelerates.
A shift in product mix, with new growth drivers becoming larger contributors, is expected to support future growth.
The company's FY31 targets for operating and FCF margins imply substantial free cash flow.
The analyst sees illustrative upside if the long-term targets are achieved.
JPMorgan framed the upcoming investor day as the first real AI-monetization sizing event, noting that the FY27 guide excludes Security for AI (six products, over $100 million in LTM bookings) and Agentic SOC.
The bar for the investor day is considered low, but reiterating guidance is essential.
The company reaffirmed its guidance for FY27 ARR and FCF margin, indicating stable performance.
Early one today as I need to head out shortly. QQQs +61bps as of 2pm ET, after the S&P and NDX both tagged fresh record highs late morning before fading as crude bounced off its lows; small caps lagged (IWM -62bps; ARKK -1.8%). Software +1.2% outpaced semis...
faded from +6.8% as investos did the math: at ~17% growth, $10B doesn’t arrive until early FY33. Bears will say a dateless $10B target with no long-term margin framework doesn’t change their mid-teens-grower view (the long-term debate). Breach headlines kep...
The long-term ARR target of $10 billion lacks a specific date, suggesting it will not be achieved until early FY33 at the current growth rate, which bears view as not changing the mid-teens growth outlook.
The company's valuation at 40x revenue is considered extremely high, posing a significant risk if the market sentiment shifts.
JPM framed the investor day as the first real AI-monetization sizing event, with the FY27 guide excluding Security for AI (six products, >$100M LTM bookings) and Agentic SOC, indicating significant untapped potential.
The bar for the investor day is perceived to be low, but reiterating the guide is considered a must, suggesting potential for disappointment if expectations are not met.
Zscaler promoted Ross Tackett to Chief Revenue Officer, expanding his responsibilities to oversee global sales, revenue operations, strategic partners, and go-to-market execution.
The company showed strength in the cyber security sector.
The stock was bid higher for most of the day after early weakness, despite Bernstein's view that valuations were full.
Bernstein stated that valuations were full.
Cybersecurity stocks outperformed, with Funda.ai's report suggesting that agentic attacks spanning zero-days, credentials, cloud workloads, and tampered logs strengthen the case for automated, cross-domain security platforms.
Cyber outperformed again: S +4%; OKTA +2%; ZS +1%. Funda.ai had a good report out yesterday saying AI says Dario Amodei’s “pace the frontier” essay and the linked METR investigation show agentic attacks already spanning zero-days, credentials, cloud workloa...
In Tech, a lot of red with Semis/Software both down 2% and Internet -1%. Broad low liquidity de-grossing day: everything red except Telecom (+0.3%), with the damage concentrated in the high multiple growth: Security SW -5.3% (CRWD/S/NET/ZS/FTNT all -5% to -...
The broader security backdrop remains healthy, indicating a generally favorable market environment for the company.
Evercore added a Tactical Underperform rating due to concerns that FY27 ARR guidance will skew to the low end, driven by softening new-logo momentum and increased competition.
Recent sales leadership turnover is weighing on execution, contributing to concerns about future performance.
The company faces increasing competitive pressure across SASE from PANW, NTSK, and Cato, impacting win rates.
The issue is more company-specific rather than a broad security market problem, making the stock a "show-me" story into FY27.
BNP Paribas says DDOG and CDNS hiring accelerated in July, while sales job openings also increased versus six months ago, a potentially positive leading indicator for future top-line growth. Rep quota attainment improved across much of software, particularl...
The company faces increased competitive and sales-transition pressure.
The company and other SASE vendors saw more mixed new-business trends.
Barclays' VAR check showed the company grew with a healthy pipeline, contributing to overall security revenue growth.
The company's performance supported continued momentum across platform consolidation, endpoint, SASE, and cyber resilience.
PANW/CRWD/ZS/RBRK Lead Barclays’ Strong 2Q Security VAR Check; FTNT/OKTA Mixed, CHKP Weak
PANW saw strong big-deal activity, CRWD accelerated in May/June, ZS grew 20% with a healthy pipeline, and RBRK posted 49% growth in June, supporting continued momentum across platform consolidation, endpoint, SASE and cyber resilience.
Cybersecurity: Evercore ISI Channel Checks Skew Positive on PANW, CRWD, FTNT — Incrementally Negative on ZS
Readthroughs skew most positive for CRWD, PANW, FTNT, and OKTA, and most mixed on ZS.
Readthroughs from cyber partner checks skew most mixed for the company.
The stock underperformed within the cyber security software sector.
Cyber underperformed in software PANW -6% / ZS -60bps / CRWD -2.4%. A good thread on the space here in Slack:
Wells Fargo is incrementally more constructive on the AI opportunity, highlighting strong partner demand, growing interest in AI agents, and a differentiated architecture well-suited for identity-centric AI deployments.
Z-Flex was a highly discussed product at the conference, with increasing evidence that enterprises are evaluating the company for broader AI security rollouts.
Checks continue to support the long-term AI thesis.
The AI monetization story remains early, with limited visibility into the pace of deployment and customer spending.
SecOps commentary was more muted than expected.
Investors may need additional proof points before AI becomes a material driver of estimates.
Needham added ZS to its Conviction List, arguing the company’s initial FY27 ARR outlook is overly conservative and creates room for upward revisions. The firm believes both Zscaler and Red Canary are tracking better than expected, with stronger renewal activity, stable NRR around 115%, and Red Canary contributing more FY27 NNARR than management originally assumed. Needham estimates implied FY27 NNARR growth is closer to 19% versus guidance for 16-17%, while metered-use products continue to scale rapidly and now contribute over 30% of new ACV. The analyst views the setup favorably given low expectations, improving ARR trends, and multiple potential catalysts for estimate revisions throughout FY27.
Guggenheim upgraded the company to Buy and introduced a $214 price target, arguing the post-earnings selloff has created an attractive entry point as revenue and ARR risks appear largely reset.
The firm believes management has stabilized GTM execution under new leadership, with improving sales productivity and signs channel contribution is recovering.
Guggenheim also sees the firewall market entering a hyper-growth phase driven by hardware displacement, positioning the company as a key beneficiary.
The firm views the Red Canary acquisition as strategically and financially accretive, adding meaningful ARR while strengthening the company’s security platform.
The core Q3 print was strong, with revenue, ARR, EPS, operating margin, billings, and several product KPIs ahead of expectations.
The company is still growing revenue and ARR in the mid-20s, has NRR around 115%, and is showing tangible traction in newer product areas that can support a broader platform story.
Z-Flex is a structural GTM improvement because it supports larger, longer-term commitments, shorter sales cycles, and better visibility.
AI optionality is a positive, as frontier models and AI agents make the Zero Trust architecture more relevant.
The Symmetry acquisition, Anthropic/OpenAI partnerships, AI Protect bookings, and GSI AI-Guardian motion are early proof that the company can expand beyond classic user-centric SSE into agentic security, AI governance, data protection, and machine-to-machine security.
The FY27 16–17% early look is intentionally conservative because it does not fully bake in upside from new-logo initiatives, AI/SecOps uptake, or improved GTM execution.
The stock was down significantly due to a decent Q3 beat but a FY27 reset to 16–17% revenue/ARR growth, fueling organic growth/competitive concerns and a materially lower FCF outlook from higher CapEx, along with a not so great sounding call.
The company gave an early FY27 view for 16–17% revenue and ARR growth, below Street expectations of roughly 19.5% revenue growth and 18.4–18.9% ARR growth, due to prudence around two senior sales leader departures, a tempered new-logo assumption, and uncertainty around customer adoption of the integrated SecOps offering.
Organic NNARR of $153M, +14% y/y, came in around or slightly below some buyside bogeys, and the FY26 ARR guide only flowed through a portion of the FQ3 beat, with implied organic NNARR deceleration into FQ4/FY27.
The lower FQ4/FY27 organic NNARR guide could be due to competition from SASE/SSE vendors.
Capex as a percentage of revenue will rise ~200bp next fiscal year, not primarily due to expansion in computing capacity but due to the spike in component prices, especially memory.
The FY27 early view of 16–17% revenue and ARR growth was below Street, and organic NNARR appears to be decelerating.
Two senior sales leader departures add uncertainty at a time when investors wanted proof of better new-logo acquisition.
The large federal deal was helpful, but public sector and a few large deals might be masking weaker broad-based organic momentum.
The FY26 FCF margin guide cut from 26.5–27.0% to 22.8–23.3% was a significant negative, and FY27 CapEx rising another 200 bps as a percent of revenue undermines the prior FCF expansion story.
Competition remains a concern, with SASE/SSE vendors like PANW, Netskope, and incumbents pressuring the space.
MU +8% getting close to $1k. Lots of your favorite AI semi names up 4-6%. Internet and Software down early, the latter led lower by ZS’s -25% horrid print, which is bringing down other cyber names as well (PANW/CRWD -4%). Interestingly, hyperscalers largely...
We’ll hit up SMTC +10% and ZS -25% first then get to the usual, where a lot of good stuff awaits today…
Bears prevailed as the company implied a meaningful deceleration with a lower 2027 ARR growth guide.
The company reported decelerating organic NNARR growth.
The company is undergoing GTM (go-to-market) changes.
Senior leaders are leaving the company.
The company cut its FCF (free cash flow) guidance.
The company provided negative commentary on capital expenditures.
ZS -31% as bears won the day on the meaningfully decel implied by lower ‘27 ARR growth guide, decelerating organic NNARR growth, GTM changes, senior leaders leaving, FCF cut, capex commentary, etc etc. Cyber taking a bit of a breather off highs in sympathy:...
The company's FY guide only partially passed through the Q3 beat, implying a substantial deceleration in growth.
The company's FY27 ARR growth guidance of 16-17% is below expectations of 17-18%, which will likely fuel bear concerns about competition and a lack of organic growth.
Charts looking better here for some stocks that have lagged: GTLB +%; ZS +6% but others like CRM +2%, ADBE+25bps or HUBS continue to look worse, which points to the increasing bifurcation in software stocks theme we have been writing about (cyber, DDOG hitt...
The company's charts are looking better, suggesting a potential recovery after lagging previously.
Charts looking better here for some stocks that have lagged: GTLB +%; ZS +6% but others like CRM +2%, ADBE+25bps or HUBS continue to look worse, which points to the increasing bifurcation in software stocks theme we have been writing about (cyber, DDOG hitt...
KeyBanc reported that ZS checks improved moderately quarter-over-quarter, with partner growth rates generally improving and a new DHS BPA contract adding to momentum, leading the firm to raise its price target to $190 from $160.
Cybersecurity: KeyBanc More Positive on PANW, OKTA, and ZS; Sees CRWD Demand Staying Strong
The stock played along with other cyber names hitting new highs, following a positive outlook from Cleveland Research last week.
The company's performance lifted the entire cyber security space.
FTNT +20% shaking off the bearish concerns that the big beat was a pull forward. Brought up the whole cyber space with CRWD/PANW +7-8% and ZS +10%.
CRWD/PANW/ZS: JPMorgan Sees AI Expanding Cyber Attack Surface, Driving Structural Security Spend Growth
Morgan Stanley downgraded the stock to Equal-Weight and cut its price target to $155, as the platform expansion thesis has not gained enough traction.
ZDX bookings are up 80% year-over-year to $100 million ARR, but Red Canary integration into Zero Trust Exchange has been slow, leaving growth dependent on core ZIA/ZPA at mid-teens year-over-year.
SASE deals are becoming larger, more complex infrastructure projects with elongating sales cycles, while broader platform vendors with deeper networking capabilities intensify pricing competition in brownfield enterprise.
Red Canary’s MDR profile introduces higher churn, and its near-term net new ARR contribution is modest, approximately $6 million in Q3 and $10 million in Q4.
PANW 3% / OKTA 2%+/ FTNT +3% / ZS +3.5%. Mythos Here’s Axios on Mythos and Chatgpt Cyber:
The company was downgraded to Neutral, with ARR estimates cut below the street, as its platform story is stalling due to firewall vendors improving SASE upselling.
The company's numbers made it difficult to determine true organic billings excluding Red Canary, and management's explanation was poorly handled.
Management's new disclosure suggested that core ZIA/ZPA growth was only in the mid-teens.
Cybersecurity companies like CRWD, ZS and NET’s (+4%) Cloudflare Tunnels also benefit.
The company's SASE segment rebounded to ~30% growth in November/December after a soft October.
FTNT delivered strong 4Q growth on solid large-deal activity. In SASE, ZS rebounded to ~30% growth in Nov/Dec after a soft October and NET saw a strong December off a small base, while endpoint remained solid with CRWD posting healthy growth and large deals...
Research through 2026-10-27 · 2026-01-08 to 2026-10-27 · 40 source reports.
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Research through 2026-11-03. Artifact validity does not establish factual accuracy or research freshness.