Zscaler Stock Dips Despite Strong Q4 Earnings as Market Demands More

Zscaler's shares fell 1.4% on Wednesday despite reporting a robust fourth-quarter performance, underscoring the market's heightened expectations for cybersecurity firms. Revenue climbed 21% year-over-year to $719 million, while annual recurring revenue (ARR) grew 22% to $3.02 billion. Non-GAAP net income ROSE 27% to $147 million ($0.89 per share), surpassing analyst estimates of $707 million in revenue and $0.80 EPS.

The company attributed its growth to escalating cybersecurity threats and increased adoption of AI-driven solutions. Yet, the muted stock reaction suggests investors are pricing in even steeper growth trajectories for sector leaders. Cybersecurity remains a fertile ground for AI-enabled players, but Zscaler's slight miss on market expectations highlights the punishing standards for tech outperformers.