ZS
Not just a beat — a flex
Zscaler's fiscal third-quarter update wasn’t just a “we beat estimates” moment. Management also highlighted rising annual recurring revenue, a record operating margin, and steady demand for its zero-trust security platform. In other words: the company is trying to tell Wall Street it can grow and tighten the screws on profitability. Rare combo, like finding a parking spot downtown and a decent avocado.
Why that matters
For software stocks, the vibe shift from “growth at any cost” to “show me the cash efficiency” has been real. So when Zscaler talks about healthier margins alongside demand trends, that’s the kind of tape investors tend to reward — especially in a market that’s been pretty picky about who gets to wear the premium-multiple crown.
The fine print investors will watch
The headline numbers sound good, but the real test is whether the company can keep converting security spending into durable recurring revenue. If customers keep leaning into zero-trust tools and Zscaler keeps expanding without the margin story falling apart, the bull case stays alive.
Big picture: this looks like another reminder that the best software names aren’t just surviving the tougher market—they’re using it to look more grown-up.