Zscaler (ZS) is preparing to release its first quarter of fiscal year 2026 earnings report today, in the midst of a pullback. The company’s stock is trading at $280 early in the day, down 14% over the past month leading in to the print.
All eyes are now on Zscaler’s upcoming earnings report. Analysts currently estimate earnings per share (EPS) of $0.86 for the first quarter of fiscal year 2026, a modest increase from the $0.77 reported in the same quarter last year.
Zscaler has navigated a series of significant events recently. In late May, Wolfe Research boosted its price target for Zscaler to $310, citing the company’s strong year-to-date performance. This optimism was fueled by Zscaler’s third-quarter fiscal year 2025 earnings release.
However, Zscaler also announced a private offering of $1.5 billion in convertible senior notes due 2028. While this move provides the company with substantial capital, it also introduces potential dilution for existing shareholders down the line, depending on the conversion price.
The company’s acquisition of AI security firm SPLX is a strategic move, integrating AI lifecycle protection into its Zero Trust Exchange platform. This acquisition positions Zscaler to capitalize on the growing demand for AI security solutions, a market projected to exceed $250 billion by the end of the year.
Zscaler finds itself at a critical point ahead of earnings. While the recent bounce off support is encouraging, and the stock trades 54% higher YTD, one should remain cautious, considering both the bullish and bearish arguments. The cybersecurity landscape is constantly evolving, and Zscaler’s ability to adapt and innovate will ultimately determine its long-term success.
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