ZS
The honeymoon’s over
Zscaler’s latest earnings may have looked fine on the surface, but this note says the important part is what’s happening under the hood: growth is cooling, and the company is having a harder time pulling in new enterprise customers. That’s not exactly the kind of plot twist investors wanted.
Why the downgrade landed
The call here is pretty blunt: the valuation may look attractive, but the business is running into some ugly math. Organic revenue growth is said to be stuck around 21%, FY27 guidance has been trimmed to the 16% to 17% range, and organic net new ARR growth is slipping into single digits. Translation: the growth engine isn’t exactly flooring it anymore.
Competition is getting louder
The note also flags competitive pressure from fully integrated platforms, which is a fancy way of saying customers may be choosing one big bundle instead of stitching together Zscaler’s tools. Add in leadership departures, and you get a mess that can ripple through pipeline quality and sales velocity.
Big picture
For investors, this is the classic “cheap for a reason” problem. Zscaler may still have a strong product story, but if growth keeps decelerating and the platformization trend keeps biting, the market may stop paying up for the name. Big picture: the stock doesn’t need perfection anymore — it needs a comeback arc.