Zscaler (ZS) AI Stock Analysis

Company Guidance

For fiscal '27, Zscaler expects first-quarter revenue of $935 million to $939 million, approximately 19% year-over-year growth, gross margin of approximately 80%, operating profit of $215 million to $217 million, up approximately 25% to 26% year-over-year, representing a 23% operating margin, net other income of approximately $33 million and earnings per share of approximately $1.15 to $1.16 per share, assuming a 21% tax rate and 170 million fully diluted shares; for the full year, it expects ARR of $4.396 billion to $4.426 billion, or year-over-year growth of approximately 16.6% to 17.4%, approximately 37% of net new ARR in the first half with 15% in Q1 fiscal '27, revenue of $3.908 billion to $3.938 billion, reflecting year-over-year growth of 16.6% to 17.5%, gross margin of approximately 80%, operating profit of $924 million to $932 million, up approximately 21% year-over-year and equating to an operating margin of approximately 23.7%, net other income of approximately $140 million to $142 million, earnings per share of $4.86 to $4.90, assuming a 21% tax rate and approximately 173 million fully diluted shares, and free cash flow margin of approximately 23% to 23.5%, reflecting CapEx, not including internal use software in the low teens as a percentage of revenue; restructuring is expected to affect approximately 3% of employees and result in restructuring charges of approximately $30 million to $33 million, security for AI products are expected to scale in the second half of fiscal 2027, and Agentic SecOps should start contributing in the second half and then fiscal '28.