Core Viewpoint - Zscaler reported better-than-expected earnings and guidance, yet its stock fell over 13% following the announcement, with Wedbush Securities maintaining an "Outperform" rating and a target price of $350 [1] Group 1: Financial Performance - For Q1 of fiscal year 2026, Zscaler reported an adjusted EPS of $0.96, with revenue increasing by 26% year-over-year to $788.1 million, surpassing analyst expectations of $0.86 EPS and $773.86 million in revenue [1] - The company expects Q2 revenue to be between $797 million and $799 million, exceeding the market consensus of $796.1 million [1] Group 2: Future Guidance - Zscaler anticipates full-year revenue to be between $3.28 billion and $3.3 billion, higher than the previous estimate of $3.27 billion [2] - The company projects full-year adjusted EPS to be between $3.78 and $3.82, up from the prior estimate of $3.65 [2] Group 3: Market Position - Analysts from Wedbush Securities highlighted Zscaler's strong position in the cybersecurity industry, particularly as enterprises transition to zero trust and AI security solutions, indicating robust demand for its product offerings [1]

Market Overview - The market is experiencing a significant rally as November comes to a close, with the S&P 500 nearing the point of erasing its losses for the month [2][4] - Investor optimism is largely driven by expectations of a potential rate cut by the Federal Reserve, with a 90% chance anticipated for a 25 basis point cut at the upcoming FOMC meeting [3][18] S&P 500 Performance - The S&P 500 saw a broad-based rally, with 372 stocks rising compared to 129 declining, indicating strong market breadth [4][7] - Major indices, including the Dow Jones Industrial Average and NASDAQ, also posted gains, with the Dow up over 300 points (approximately 0.7%) and the NASDAQ up about 0.8% [5][6] Sector Performance - Information technology was the top-performing sector, contributing significantly to the day's gains, followed by financials, consumer discretionary, and consumer staples [8] - Conversely, healthcare and communications services underperformed, with Alphabet's stock contributing to the decline in communications services [9][16] Notable Company Performances - Dell Technologies was a top gainer, finishing up 5.8% after reporting strong earnings and raising its full-year forecast, driven by a surge in AI server orders totaling $12.3 billion [10][11] - Urban Outfitters saw a significant increase of over 13% following positive earnings reports from peers, with its stock up approximately 40% year-to-date [12][13] - Robinhood Markets gained about 11% after announcing a deal to acquire a majority stake in a derivatives exchange, marking a 235% increase year-to-date [14] Decliners - Deere and Company experienced a decline of 5.7% due to a weak forecast for the upcoming year, reflecting challenges in the U.S. farm economy [15] - Alphabet Inc. was the largest decliner in the S&P 500, down 1.1%, giving back some of its recent gains despite a 70% increase year-to-date [16][17] - Zscaler fell 13%, marking its largest drop in over a year after forecasting annual revenue that slightly exceeded estimates [17]

Core Insights - Zscaler (ZS) shares experienced a significant decline of 13% on November 26, despite reporting strong financial results for Q1 and raising its full-year guidance, projecting $3.29 billion in revenue and earnings of up to $3.82 per share, both exceeding consensus estimates [1][2] Financial Performance - In Q1, Zscaler achieved a remarkable 26% top-line growth and a free cash flow margin of 52%, surpassing the typical Rule of 40 benchmark for SaaS companies [3] - The company improved its free cash flow margin by 600 basis points year-over-year, indicating efficient scaling while maintaining high growth rates [4] Strategic Growth Initiatives - Zscaler's three strategic growth pillars are performing ahead of schedule, with AI Security expected to exceed $500 million in annual recurring revenue (ARR) by year-end, achieving this target three quarters early [5] - The Z-Flex program generated over $175 million in total contract value bookings in Q1, reflecting over 70% sequential growth and strong market demand [5] Market Sentiment - Historical data suggests that owning Zscaler shares heading into 2026 is favorable, with an average gain of 7.66% in January over the past four years [6] - Wall Street analysts maintain a bullish outlook on Zscaler, with a consensus rating of "Strong Buy" and a mean target price of approximately $329, indicating a potential upside of nearly 30% [8]

Financial Performance - Zscaler's revenue grew 26% [1][2] - Zscaler's ARR (Annual Recurring Revenue) growth is 26% [1] - Zscaler's RPO (Remaining Performance Obligations) growth is 35% [1] - Zscaler's free cash flow margin is 52% [1][2] - Zscaler is operating at a rule of 78 (revenue growth plus free cash flow) [2] Business Operations and Strategy - Zscaler's organic business contributed significantly to the outperformance [3][5] - Zscaler raised its annual guidance [3][5] - Zscaler is acquiring new customers and selling AI security products [3] - Zscaler is displacing point products to reduce cost and complexity [3] Red Canary Acquisition - Red Canary's contribution is very small compared to Zscaler's overall business [4] - The beat was largely due to Zscaler's organic business, not Red Canary [5]

Core Insights - The company reported a strong quarter with revenue growth of 26%, annual recurring revenue (ARR) growth of 26%, and remaining performance obligation (RPO) growth of 35% [1][2] - The free cash flow margin was notably high at 52%, indicating strong operational efficiency [2] - The company raised its annual guidance based on the strong performance of its organic business, which was the primary driver of the outperformance [3][5] Revenue and Growth Metrics - The company is among a select group of firms with an ARR of $3.3 billion or higher, achieving over 25% growth [2] - The organic business significantly contributed to the overall performance, with minimal impact from the Red Canary deal [4][5] Customer Acquisition and Product Offering - The company successfully acquired a substantial number of customers and is effectively selling AI security products, which are displacing multiple point products to reduce costs and complexity [3] - Customer satisfaction remains high, with the company performing well across all operational metrics [5]

Core Viewpoint - Zscaler reported strong fiscal first-quarter results with earnings and sales exceeding Wall Street expectations, yet the stock price declined due to high market expectations prior to the report [1][2][4]. Financial Performance - Zscaler earned an adjusted 96 cents per share for the quarter ending October 31, a 25% increase from the previous year, surpassing analyst expectations of 86 cents [2]. - Sales rose 26% to $788 million, exceeding analyst estimates of $773 million [2]. - For the current quarter, Zscaler guided for sales of $798 million, slightly above the analyst forecast of $796 million, with earnings per share guidance between 89 cents and 90 cents aligning with estimates [3]. Market Response - Despite positive quarterly performance, Zscaler's stock fell over 10% to $258.80, contributing to a 21% decline in November, although it remains up 44% year-to-date [4][8]. - Analysts expressed mixed sentiments; while some noted the results met buy-side expectations, others highlighted the need for clearer disclosures regarding the performance of the recently acquired Red Canary [6][7]. Competitive Landscape - Zscaler operates in the cloud-based cybersecurity sector, competing with companies like Palo Alto Networks, Cloudflare, and Fortinet [5]. - The company is recognized for its Secure Access Service Edge (SASE) offering, which is crucial for securing corporate networks [5]. Analyst Insights - Morgan Stanley's analyst noted that Zscaler's results were largely in line with expectations, expressing confidence in growth prospects despite minor concerns [6]. - Mizuho's analyst pointed out two unwelcome surprises: lower guidance for net new annual recurring revenue (ARR) and lack of specific contribution details from the Red Canary acquisition, leading to a price target reduction [7]. Stock Ratings - Zscaler's stock had an IBD Composite Rating of 91 out of 99, indicating strong growth potential, although the recent stock slide raises questions about future performance [8].

Market Overview - U.S. markets opened with modest gains, with Nasdaq Futures leading at +0.52%, followed by S&P 500 Futures at +0.33% and Dow at +0.22% [5][6] Economic Indicators - Chicago PMI for November reported at 36.3, significantly below the consensus of 44.3, marking the second lowest reading since the pandemic and the 24th consecutive month of decline [2] - U.S. jobless claims decreased to 216,000 for the week of Nov. 22, down from 222,000 the previous week and below expectations of 225,000, indicating potential stabilization in the job market [3] - Durable goods orders for September increased by 0.5%, surpassing the expected 0.3%, driven by a 30.9% rise in defense aircraft/parts, although this growth rate was slower than the 3% gain in August [4] Company Performance Winners - Petco Health saw a significant increase of 21.9% following strong earnings reported after the previous market close [5] - Other notable gainers included Autodesk (+7.7%), Bentley Systems (+6.7%), and Oracle (+6%) [5] Losers - Nutanix experienced a sharp decline of 11.3% after disappointing earnings results [7] - Zscaler fell by 7% due to conservative guidance, while Reynolds and Workday dropped by 6.3% and 6.2% respectively, with Workday providing a weak boost to its full-year guidance [7]

Core Insights - Proactive provides fast, accessible, and informative business and finance news content to a global investment audience [2] - The company focuses on medium and small-cap markets while also covering blue-chip companies and broader investment stories [3] - Proactive's news team delivers insights across various sectors including biotech, mining, oil and gas, and emerging technologies [3] Technology Adoption - Proactive is committed to adopting technology to enhance workflows and content production [4] - The company utilizes automation and software tools, including generative AI, while ensuring all content is edited and authored by humans [5]

Core Insights - Zscaler, Inc. reported strong first-quarter fiscal 2026 results with non-GAAP earnings of 96 cents per share, exceeding estimates by 12.94% and showing a year-over-year increase of 23.6% driven by higher revenues and effective cost management [1][9] - The company's revenues for the first quarter reached $788.1 million, surpassing the Zacks Consensus Estimate by 1.91% and management's guidance, reflecting a 26% year-over-year growth [2][9] - Zscaler raised its fiscal 2026 revenue guidance to a range of $3.282-$3.301 billion, up from the previous forecast, indicating strong market demand and performance [7] Financial Performance - Non-GAAP gross profit increased by 24.5% year over year to $630 million, while the gross margin contracted by 100 basis points to 80% [5] - Non-GAAP operating income rose to $172 million from $90 million in the previous year, with the operating margin expanding by 100 basis points to 22% [5] - Remaining Performance Obligations (RPO) reached $5.9 billion, a 35% increase year over year, indicating strong future revenue commitments [3][9] Customer Growth - Zscaler added multiple large customers across its offerings, ending the quarter with 698 customers generating $1 million or more in annual recurring revenues (ARR) [4] - The total customer count for ARR exceeding $100,000 reached 3,754 by the end of the first quarter [4] Cash Flow and Balance Sheet - As of October 31, 2025, Zscaler had $3.32 billion in cash and short-term investments, down from $3.57 billion as of July 31, 2025 [6] - The company generated operating cash flow of $448.3 million and free cash flow of $413.3 million during the first quarter [6] Future Guidance - For the second quarter of fiscal 2026, Zscaler projects revenues between $797 million and $799 million, with non-GAAP earnings per share expected between 89 cents and 90 cents [10] - The Zacks Consensus Estimate for second-quarter revenues is $794.38 million, indicating a year-over-year growth of 22.6% [10]

Market Overview - U.S. stock futures rose on Wednesday following Tuesday's gains, with major benchmark indices showing positive movement [1] - The three-day winning streak occurs during a holiday-shortened week, with markets closed on Thursday and open until 1:00 p.m. ET on Friday [1] - Traders are pricing in an 84.9% likelihood of a Federal Reserve interest rate cut in December, influenced by dovish central bank guidance [2] Index Performance - Dow Jones increased by 0.21%, S&P 500 by 0.23%, Nasdaq 100 by 0.29%, and Russell 2000 by 0.22% [2] - The SPDR S&P 500 ETF Trust (SPY) rose by 0.29% to $677.01, while Invesco QQQ Trust ETF (QQQ) advanced by 0.36% to $611.10 in premarket trading [2] Company Highlights - **Dell Technologies Inc. (DELL)**: Stock jumped 4.94% after mixed Q3 results; raised full-year revenue outlook to $111.2 billion - $112.2 billion from $105 billion - $109 billion [7] - **HP Inc. (HPQ)**: Stock fell 5.67% despite better-than-expected Q4 earnings; announced layoffs and issued weak forward guidance [7] - **Autodesk Inc. (ADSK)**: Stock climbed 7% after beating Q3 earnings and revenue expectations; raised full-year revenue guidance to $7.15 billion - $7.17 billion and adjusted earnings guidance to $10.18 - $10.25 per share [7] - **Zscaler Inc. (ZS)**: Stock dropped 7.15% despite beating analyst estimates and raising fiscal 2026 outlook; maintained a weaker price trend in the short and medium terms but a strong long-term trend [14] - **Uber Technologies Inc. (UBER)**: Stock increased by 0.73% after announcing the launch of Level 4 fully driverless Robotaxi operations in Abu Dhabi [14] Sector Performance - Communication services, health care, and consumer discretionary sectors recorded the biggest gains on Tuesday, leading the S&P 500 into positive territory [9] Economic Data - Initial jobless claims data for the week ending Nov. 22 and September's delayed durable-goods orders data will be released at 8:30 a.m. ET [15]