Zscaler Stock Soars After Robust Earnings Boosted by AI-Driven Cybersecurity Demand
Meta Description (SEO): Zscaler stock surges after beating Q3 earnings, fueled by record demand for AI-powered cybersecurity services and robust enterprise adoption.
Cloud security firm Zscaler exceeds quarterly expectations, citing record-breaking customer adoption and surging demand for AI-powered protection.
Zscaler Inc. (NASDAQ: ZS), a global leader in cloud-based cybersecurity, saw its shares jump over 17% in after-hours trading Thursday following the release of its fiscal third-quarter earnings, which handily beat Wall Street estimates. The company attributed its standout performance to unprecedented demand for AI-powered security services amid a rising tide of cyber threats against enterprises.
AI-Driven Growth Propels Zscaler Beyond Analyst Projections
Zscaler reported revenue of $553.2 million for the quarter ending April 30, 2025, representing a 32% year-over-year increase and surpassing analysts’ consensus estimate of $535.5 million, according to LSEG data. Adjusted earnings per share came in at 89 cents, above the expected 66 cents per share and up from 57 cents in the year-ago period.
CEO Jay Chaudhry highlighted record customer acquisitions and the rapid adoption of Zscaler’s artificial intelligence and machine learning capabilities as drivers for the quarter’s exceptional results. Chaudhry stated during the earnings call, "AI-enabled threats are accelerating, and organizations are seeking out scalable, cloud-delivered security solutions. Our Zero Trust Exchange platform, with embedded AI, is proving to be a critical differentiator."
Enterprise Demand for Cloud Security Remains Strong
The surge in Zscaler’s revenue reflects a broader enterprise shift toward advanced cybersecurity, especially as businesses grapple with an ever-evolving threat landscape. The company’s robust suite of cloud-delivered protection services is in high demand from organizations modernizing operations and migrating workflows to the cloud.
According to Chaudhry, the latest quarter also marked a record number of deals worth over $1 million each, underscoring significant traction among large enterprise clients. Zscaler’s remaining performance obligations (RPO), a key metric of future revenue, grew 29% year-over-year to $3.98 billion.
"Zscaler's ability to consistently deliver strong top-line growth amid economic uncertainty speaks volumes about the central role cybersecurity plays in corporate digital transformation," said Daniel Ives, Managing Director and Senior Equity Research Analyst at Wedbush Securities, in a client note.
Investment in GenAI Security Capabilities Fuels Optimism
The momentum is further bolstered by Zscaler’s continued commitment to artificial intelligence innovation within its security platform. The company has rolled out new generative AI-powered threat detection features, aiming to stay a step ahead of advanced attacks and empowering security and IT teams with enhanced analytical and response tools.
CFO Remo Canessa emphasized the strategic importance of these investments, saying, “By embedding generative AI throughout our cloud platform, we are ensuring Zscaler customers remain protected as cyber threats become more complex and pervasive.”
Outlook Raised Amid Heightened Cyber Threats
Looking ahead, Zscaler raised its full-year revenue outlook, now expecting between $2.12 billion and $2.13 billion—up from previous guidance—reflecting confidence in sustained demand. The company expects adjusted earnings per share for the full year to range between $3.51 and $3.53.
Analysts largely welcomed the guidance and positive results. “Zscaler remains one of the best-positioned security vendors to capitalize on accelerated cloud adoption and the urgency surrounding AI-driven threat defense,” said Jefferies analyst Joseph Gallo.
Competitive Landscape and Market Challenges
While Zscaler’s performance underscores its leadership within the zero trust and cloud security segments, the cybersecurity market remains fiercely competitive. Rivals like Palo Alto Networks and CrowdStrike are also rapidly integrating AI into their platforms, each vying for greater market share as large enterprises increase their security spending.
Despite robust results, some analysts caution that continued execution and innovation will be vital, given macroeconomic uncertainties and potential demand shifts. However, Zscaler’s Q3 performance reinforces the prevailing sentiment that cybersecurity budgets are proving resilient amid broader tech spending slowdowns.
Sources:
CNBC: Zscaler stock pops 17% after AI-fueled earnings blow past Wall Street expectations
Zscaler Q3 2025 Earnings Call, May 30, 2025
Wedbush Securities, Jefferies – Analyst Notes (industry commentary)
LSEG earnings estimate data