Cybersecurity firm Zscaler Inc. (NASDAQ:ZS)’s shares were lower in pre market trading the day the firm reported its fiscal fourth quarter earnings report. The results saw the frm’s revenue grow by 25% annualy and its non-GAAP earnings grow by 33%. Additionally, the revenue of $898 million and non GAAP earnings per share of $1.19 beat analyst estimates of $807 million and $1.09. With the shares remaining muted following the release, Crmaer briefly commented on the results in a tweet:
“More good ones than bad ones so far…Lotta Zscaler shorts out there. Sorry.”
Zscaler Inc.’s industry, cybersecurity, is a sector that Cramer is enthusiastic about. Two of his favorites in the sector are CrowdStrike and Palo Alto Networks. The firm’s latest quarter was a solid set of figures on all fronts, which includes the annual recurring revenue (ARR). Zscaler Inc.’s Q4 ARR jumped by 35% to $3.77 billion, out of which $246 million was net new ARR.
Crucially, the firm demonstrated strong net new ARR growth even if the impact of its Red Canary acquisition is removed. Without the acquisition, Zscaler Inc.’s net new ARR growth was 17%, which marked a strong acceleration over the year-ago quarter’s 7%. Additionally, the firm also exited the quarter with more than 785 customers with more than $1 million in ARR and a 50% penetration rate into the Fortune 500. The growth comes at a time when Zscaler Inc. is expanding its AI initiatives to cover AI agents through the Zero Trust platform and corporate large language model deployment via the AI Guard platform. Additionally, CEO Jay Chaudhry claimed to CNBC that his firm had delivered a 50% sequential expansion in AI security bookings in the quarter.
Yet, looking at the fiscal year 2027 guidance, Zscaler Inc. could be in for a deceleration. Comparing the firm’s FY27 revenue guidance of $3.91 billion to $3.94 billion to its FY26 revenue of $3.35 billion shows that growth could range between 16.6% to 17.5%, while FY26 revenue growth was 25%. Additionally, powering the AI growth comes at a cost as Zscaler Inc.’s FY26 R&D expenses of $903 million marked a 34% annual growth.
During Q2 2026, Insider Monkey’s data shows that hedge fund sentiment appeared to improve as 52 out of 1,006 funds had held a stake in the firm. In Q1, the figure was 46 out of 1,022 funds. Millennium Management increased its stake significantly, as its $159 million stake marked a 238% annnual jump. Additionally, Jericho Capital Asset Management added a new stake worth $192 million. Compared to peers Palo Alto Networks and CrowdStrike, Zscaler Inc.’s forward P/E ratio is significantly lower. It sits at 38.9 compared to PANW’s 87 and CRWD’s 172. As for the short interest, Cramer was right since 5.9% of the float is short compared to less than 3% for the other two.
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