ZS
Earnings season, but make it Zscaler
Zscaler just turned in a fiscal third quarter that showed the company is still very much in the “people need this” camp of cybersecurity. Management said annual recurring revenue kept growing, operating margin hit a record, and customers are leaning harder into its zero-trust security platform as they roll out more AI tools.
Why you should care
That combo matters because cybersecurity can sometimes feel like a subscription treadmill: keep the revenue growing, keep the margins expanding, and suddenly Wall Street stops squinting at the valuation like it’s a suspiciously expensive latte. Zscaler appears to be doing the part investors love most — proving that growth and efficiency can live in the same house.
The AI angle is the sneaky part
A lot of companies are racing to plug AI into everything and then remembering, mid-sprint, that security is a thing. Zscaler is basically telling investors: great, keep adopting AI — and by the way, you’ll probably need more of our stuff to do it safely.
- Annual recurring revenue is still moving up, which is the cleanest signal for a software company that the business engine is running.
- Record operating margin suggests the company isn’t just growing; it’s getting more disciplined while doing it.
- Rising demand tied to AI adoption gives Zscaler a nice narrative tailwind, not just a one-quarter pop.
Big picture
If Zscaler can keep translating AI-fueled security demand into both growth and margin expansion, that’s the kind of storyline investors like to keep on repeat. Not glamorous, maybe, but very profitable if it sticks.