ZS F3Q26 - Introduce an FY27 outlook. Upset the established order, everything becomes chaos.

Research evidence excerpt

ZS F3Q26 - Introduce an FY27 outlook. Upset the established order, everything becomes chaos.

Security Software

Security Software - Market Weight

ZSCALER, INC. (ZS) May 26, 2026

ZS F3Q26 - Introduce an FY27 outlook. Upset the Rating:

established order, everything becomes chaos. Outperform

Price:

$184.60

The Wolfe Byte Price Target:

ZS delivered a solid 3Q but cut 4Q organic ARR and provided an early growth $183

Prior: $200outlook for next year that was below consensus. We expect shares to be in % Upside:

the penalty box until management can demonstrate that next years guidance is (0.9)%

prudent base to raise upon throughout FY27. View ZS Model

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ZS delivered a solid 3Q but cut 4Q organic ARR and provided an early look for Company Information

FY27 growth that was below consensus. Total ARR grew 25% and was 54bps 52-Week Range $115 - $337

$24,318 Cap. (MM)ahead of consensus (40bp beat in 2Q). Organic ARR grew 20.6% and organic NNARR Market $27,829 Enterprise Value (MM)

grew 14.2%, implying $127M of Red Canary (RC) ARR and $13M of RC NNARR Shares Out. (MM) 166.6

(vs. ZS modeling considerations of $6M). The quarter was driven by Data Security, Avg. Value Traded (MM) $720.25

SI% of Float 9.8%

early momentum with AI protect, the cloud marketplace, Zero Trust Branch, large EV/ Revenue 5.0x

deals in APJ, and public sector. NG operating margin hit a record 23%, while FCF EV/ FCF 20.3x

was ~3M light of cons. Management raised the FY26 ARR outlook to $3744.5M at

the MP (including $137M of RC) and reiterated the organic FY26 NNARR growth of 350

9.5% which implies a $7M cut to 4Q organic NNARR. ZS also provided an early look 300

250for FY27 ARR growth of 16.5% (vs cons of 18.4%), which calls for 4.3% NNARR

growth off of the implied organic NNARR for FY26.