Group 1 - Proactive provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [2][3] - The news team covers key finance and investing hubs including London, New York, Toronto, Vancouver, Sydney, and Perth [2] - Proactive focuses on medium and small-cap markets while also covering blue-chip companies, commodities, and broader investment stories [2][3] Group 2 - The team delivers news and insights across various sectors including biotech, pharma, mining, natural resources, battery metals, oil and gas, crypto, and emerging technologies [3] - Proactive adopts technology to enhance workflows and improve content production [4][5] - All content published by Proactive is edited and authored by humans, ensuring adherence to best practices in content production and search engine optimization [5]

Financial Performance - Zscaler's ARR growth year-over-year is 22% [2] - Zscaler is one of two pure-play SaaS security companies that have crossed $3 billion in ARR [3] - Zscaler's free cash flow is 27% [3] - Data security products exceeded $425 million ARR [6] - AI portfolio crossed a quarter of a billion dollars in ARR [12] Business Strategy & Market Focus - Zscaler is shifting focus from Billings to ARR, aligning with investor preference for SaaS security companies [4] - Zscaler is focused on solving customer problems and believes its guidance is good, with positive feedback from investors and analysts [5] - Zscaler's customer base is expanding, with Fortune 500 companies increasing from 40% to 45% and Global 2000 companies from 35% to 40% [6] - Zscaler's solutions help customers save money, addressing pressure on IT leaders to reduce costs [7] - Zscaler emphasizes a fully integrated comprehensive platform, eliminating legacy products rather than building on top of them [8][9][10] AI Security - AI security is becoming a bigger piece of Zscaler's business, with a portfolio including securing Gen AI public applications and private AI models [11][12] - Zscaler expects its AI portfolio to grow at a much faster pace [12]

Core Insights - Zscaler Inc reported strong fiscal fourth-quarter results, with annual recurring revenues (ARR) increasing by 22% and initial guidance for fiscal 2026 indicating 19% growth [1][7][8] Financial Performance - Billings reached $1,202 million, a 32% year-on-year increase, surpassing the consensus estimate of $1,145 million [3][8] - Revenue for the quarter was $719 million, exceeding expectations of $708 million [3] - ARR for the fourth quarter was $3.015 billion, remaining flat sequentially, but net new ARR growth accelerated to 16% year-on-year from 6% in the previous quarter [3][11] Guidance and Future Outlook - Management guided for an operating margin expansion of approximately 65 basis points for fiscal 2026, indicating potential for upside [2] - The ARR guidance for fiscal 2026 is set at $3.676-$3.698 billion, reflecting a growth rate of 22%-23% [8] - The guidance does not include contributions from Red Canary contracts, which are up for renewal in fiscal 2026 [9] Market Position and Growth Areas - Zscaler is experiencing strong momentum in the Secure Access Service Edge (SASE) market, with a robust portfolio of emerging products [4][6] - The company's emerging growth categories, including AI Security, Zero Trust Everywhere, and Data Security Everywhere, now represent over $1 billion in combined ARR and are growing faster than the overall business [11] - Customers contributing $1 million in ARR grew by 18% year-on-year, while those spending over $100,000 increased by 13% [11] Analyst Sentiment - Analysts have noted that Zscaler's results substantially exceeded expectations across growth and profitability metrics [4][10] - The company is well-positioned to maintain a 22% year-on-year revenue growth trajectory [5]

Core Insights - Zscaler's shares are down 2.9% to $266.49 despite surpassing earnings and revenue estimates with $0.89 per share and $719.23 million in revenue, indicating strong fourth-quarter performance driven by its AI-powered model, although a recent data breach may be affecting post-earnings momentum [1] Group 1: Stock Performance - If the current dip persists, it would mark three consecutive sessions of decline and the third post-earnings slump in the last five reports, representing the worst single-day performance in nearly a month, with an overall decline of 11% over the past three months [2] - The stock is currently facing a downtrend that began in early July, but the 120-day moving average and the $260 level may help contain losses as the stock attempts to regain earlier optimism [2] Group 2: Analyst Sentiment - Despite the decline, Zscaler received upgrades and price-target increases from at least nine firms, including JP Morgan and Barclays Securities, while Scotiabank Securities was among the few to issue a price cut; prior to the recent dip, 32 out of 43 analysts were bullish on the stock [3] Group 3: Options Market Activity - Options traders appear skeptical about a rebound, as the equity's 10-day and 50-day put/call volume ratios rank in the 83rd and 96th percentiles, respectively [4] - There has been significant activity in the options market, with 19,000 puts traded today, which is 14 times the usual amount, indicating heightened bearish sentiment; the most popular contract is the weekly 9/5 250-strike put [5]

Core Insights - Zscaler Inc reported better-than-expected financial results for Q4 fiscal 2025, with revenue of $719.23 million, surpassing the consensus estimate of $706.91 million and adjusted earnings of 89 cents per share, exceeding analyst estimates of 80 cents per share [1][2] Financial Performance - Fourth-quarter revenue: $719.23 million, beating estimates of $706.91 million [1] - Fourth-quarter adjusted earnings: 89 cents per share, surpassing estimates of 80 cents per share [1] - First-quarter revenue guidance: $772 million to $774 million, compared to estimates of $750.51 million [3] - First-quarter adjusted earnings guidance: 85 to 86 cents per share, against estimates of 84 cents per share [3] - Fiscal 2026 revenue forecast: $3.27 billion to $3.28 billion, exceeding estimates of $2.66 billion [3] - Full-year adjusted earnings forecast: $3.64 to $3.68 per share, compared to estimates of $3.18 per share [3] Market Reaction - Zscaler shares fell 4.5% to $262.19 following the earnings announcement [4] Analyst Ratings and Price Targets - Rosenblatt analyst maintained a Buy rating, raising the price target from $315 to $330 [6] - Baird analyst maintained an Outperform rating, increasing the price target from $330 to $345 [6] - Keybanc analyst maintained an Overweight rating, boosting the price target from $345 to $350 [6] - Stifel analyst maintained a Buy rating, raising the price target from $295 to $330 [6] - Piper Sandler analyst maintained a Neutral rating, increasing the price target from $260 to $280 [6] - Susquehanna analyst maintained a Positive rating, raising the price target from $320 to $340 [6] - Scotiabank analyst maintained a Sector Outperform rating, lowering the price target from $360 to $334 [6]

Market Overview - U.S. stock markets experienced a "risk off" attitude, with the Dow closing at -0.55%, S&P 500 at -0.69%, and Nasdaq at -0.60% [1] - Goldman Sachs was the worst performer on the Dow, down -1.9%, while Kraft Heinz fell -7%, the largest drop in the S&P 500 [2] Commodity Performance - Gold prices reached a new all-time high, increasing by +2.35% to just below $3600 per ounce [2] - Bitcoin also saw growth, rising +1.88% to $111,313 [2] Company Earnings - Zscaler reported fiscal Q4 results, with earnings of 89 cents per share, beating estimates by 9 cents, and quarterly sales of $719 million, surpassing expectations of $706 million [3] - Zscaler's billings were notably higher than expected, and guidance for the next quarter and full fiscal year was raised, leading to a +5% increase in shares during late trading [3] Economic Indicators - S&P Manufacturing PMI for August was slightly below expectations at +53.0, down -30 basis points from the previous month, while ISM Manufacturing improved to +48.7%, 70 basis points above the prior month [4] - Construction spending for July showed a slight improvement, moving from -0.4% in June to -0.1%, although it remains below expectations [5] Upcoming Reports - The Job Openings and Labor Turnover Survey (JOLTS) for July is expected to remain stable at 7.4 million job openings, consistent with the current labor market trends [6] - Factory Orders for July are anticipated to improve to -1.3% from -4.8% in June, with additional reports on the Beige Book and August Auto Sales expected [7] - Salesforce is expected to report quarterly earnings with +8.2% growth in earnings per share and +8.7% in revenues, having only missed earnings once in the past five years [8]

Core Viewpoint - Zscaler reported quarterly earnings of $0.89 per share, exceeding the Zacks Consensus Estimate of $0.80 per share, and showing a slight increase from $0.88 per share a year ago, indicating a positive earnings surprise of +11.25% [1][2] Financial Performance - The company achieved revenues of $719.23 million for the quarter ended July 2025, surpassing the Zacks Consensus Estimate by 1.84% and reflecting a year-over-year increase from $592.87 million [2] - Over the last four quarters, Zscaler has consistently exceeded consensus EPS and revenue estimates [2] Stock Performance - Zscaler shares have increased approximately 53.6% since the beginning of the year, significantly outperforming the S&P 500's gain of 9.8% [3] Future Outlook - The company's earnings outlook will be crucial for assessing future stock performance, with current consensus EPS estimates at $0.83 for the upcoming quarter and $3.57 for the current fiscal year, alongside projected revenues of $749.87 million and $3.19 billion respectively [7] - The Zacks Rank for Zscaler is currently 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Security industry, to which Zscaler belongs, is currently ranked in the top 33% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8]

Financial Data and Key Metrics Changes - Revenue grew 21% year over year in Q4, reaching $719 million, and total revenue for fiscal year 2025 was $2.7 billion, representing 23% year over year growth [8][24] - Annual recurring revenue (ARR) surpassed $3 billion, marking a 22% year over year increase [9][23] - Operating margin exceeded 22%, a quarterly record, and free cash flow margin was 24% for Q4 [8][26] Business Line Data and Key Metrics Changes - AI security solutions, including AI Guard and JNI security offerings, saw significant customer interest, contributing to the overall growth [8][10] - SecOps ARR grew over 85% year over year, while IT operations innovations drove 58% year over year growth in bookings of ZDX Advanced plus SKU [14][19] - Data Security Everywhere ARR reached approximately $425 million, with strong demand for comprehensive data security capabilities [19][20] Market Data and Key Metrics Changes - The Americas accounted for 55% of revenue, EMEA for 29%, and APJ for 16% in Q4 [24] - The company now serves nearly 40% of the Global 2000 and over 45% of Fortune 500 companies, indicating a strong market presence [25] Company Strategy and Development Direction - The company is focusing on three growth factors: AI security, Zero Trust Everywhere, and Data Security Everywhere, which together surpassed $1 billion in ARR in Q4 [10][20] - The Z Flex program generated over $100 million in TCV bookings in Q4, representing over 50% sequential growth, and is becoming a preferred method for strategic multi-year deals [21][70] - The company aims to accelerate platform innovations and capitalize on the $100 billion security market opportunity [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for their solutions and the operational scale, expecting continued growth in fiscal year 2026 [23][31] - The macro environment is anticipated to remain relatively unchanged, with a focus on ARR as the primary growth metric moving forward [28][95] Other Important Information - The company successfully closed the acquisition of Red Canary, contributing approximately $83 million to ARR at close [27] - The gross margin for Q4 was 79.3%, lower than the historical target of 80% due to a one-time deployment [25][26] Q&A Session Summary Question: How is SASE replacing firewall appliances? - Management indicated that firewall appliances, particularly in branches, are being replaced by Zero Trust architecture, with significant demand for Zero Trust branch solutions [34][36] Question: How will Z Flex help exceed sales goals? - Z Flex provides flexibility in module adoption and pricing, allowing for larger and better deals, and is being expanded to a broader customer base [40][44] Question: What does a Zero Trust Everywhere customer look like? - A Zero Trust Everywhere customer typically sees significant increases in ARR, with many deals resulting in 2x or 3x growth [46][50] Question: What is the focus of AI security product adoption? - Customers are primarily focused on securing public AI applications and private models, with growing interest in agent-to-agent communication [54][56] Question: What is the expected growth for data security solutions? - Data security solutions are being adopted alongside Zero Trust solutions, with a significant opportunity for upselling additional modules [61][65] Question: What is the methodology behind fiscal year guidance? - The company maintains a prudent approach to guidance, shifting focus from billings to ARR as a better alignment with the business model [92][94]

Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $719 million, representing a 21% year-over-year growth and exceeding guidance [19] - Annual recurring revenue (ARR) surpassed $3 billion, marking a 22% year-over-year increase [19][6] - Operating margin reached 22.1%, a record high, with a free cash flow margin of 24% [21][19] - Gross margin was 79.3%, slightly lower than the historical target of 80% due to a one-time deployment [21] Business Line Data and Key Metrics Changes - AI Security, Zero Trust Everywhere, and Data Security Everywhere collectively surpassed $1 billion in ARR in Q4 [6] - SecOps ARR grew over 85% year-over-year, while ZDX Advanced Plus Queue bookings increased by 58% year-over-year [10] - Data Security Everywhere ARR grew to approximately $425 million, with significant deal wins [16] Market Data and Key Metrics Changes - The Americas accounted for 55% of revenue, EMEA for 29%, and APJ for 16% [20] - The company serves nearly 40% of the Global 2000 and over 45% of Fortune 500 companies [19][5] Company Strategy and Development Direction - The company is focusing on three growth vectors: AI Security, Zero Trust Everywhere, and Data Security Everywhere [6] - The ZFlex program is being utilized to facilitate strategic multi-year deals and increase module adoption [17] - The company aims to replace legacy solutions in various sectors, including finance, healthcare, and retail [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for their solutions, particularly in AI and Zero Trust security [5] - The company anticipates a stable macro environment for fiscal 2026, with a focus on ARR as the primary growth metric [24][72] - Management expects to continue strong growth in AI Security and Zero Trust solutions, with significant upsell opportunities [67] Other Important Information - The acquisition of Red Canary is expected to contribute approximately $95 million to ARR in fiscal 2026 [23] - The company ended Q4 with $3.6 billion in cash and short-term investments [23] Q&A Session Summary Question: How is SASE replacing firewall appliances? - Management indicated that Zero Trust architecture is essential, and firewall appliances are being phased out, starting with branch firewalls [29] Question: How will ZFlex be utilized by the sales force? - ZFlex is designed to provide flexibility in module adoption, allowing for larger and better deals, and is being expanded to a broader customer base [33] Question: What does a Zero Trust Everywhere customer look like? - A Zero Trust Everywhere customer typically adopts multiple modules, leading to significant increases in ARR [36] Question: What is the focus of AI security product adoption? - Customers are primarily interested in securing both public and private AI applications, with a growing focus on agent-to-agent communication [41] Question: What is the expected growth trajectory for net new ARR? - Management is guiding for high single-digit net new ARR growth in fiscal 2026 on an organic basis [46] Question: How is the data security portfolio performing? - Data security solutions are often purchased alongside Zero Trust solutions, with significant growth potential as customers consolidate their security products [49] Question: What is the impact of ZFlex on financial metrics? - ZFlex is applicable to both new and existing customers, increasing potential deal sizes without fundamentally changing the financial model [53]

Financial Data and Key Metrics Changes - Revenue for Q4 2025 grew 21% year over year, reaching $719 million, and total revenue for fiscal year 2025 was $2.7 billion, representing a 23% year over year growth [6][23] - Annual recurring revenue (ARR) surpassed $3 billion, marking a 22% year over year increase [7][22] - Operating margin for Q4 was 22.1%, exceeding long-term targets and growing approximately 60 basis points year over year [26] - Free cash flow margin for Q4 was 24%, with data center CapEx at 8% of revenue [26] Business Line Data and Key Metrics Changes - AI security solutions, including AI Guard and JNI security offerings, saw significant customer interest, contributing to the overall growth [6][10] - SecOps ARR grew over 85% year over year, while ZDX Advanced plus SKU bookings increased by 58% year over year [12][19] - Data Security Everywhere ARR reached approximately $425 million, with strong demand driving growth [18] Market Data and Key Metrics Changes - The Americas accounted for 55% of revenue, EMEA for 29%, and APJ for 16% [23] - The company now serves nearly 40% of the Global 2000 and over 45% of Fortune 500 companies, indicating a strong market presence [22][24] Company Strategy and Development Direction - The company is focusing on three growth factors: AI security, Zero Trust Everywhere, and Data Security Everywhere, which together surpassed $1 billion in ARR in Q4 [8][19] - The Z Flex program generated over $100 million in TCV bookings in Q4, representing over 50% sequential growth, and is expected to drive future growth [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for their solutions and the potential for growth in the Zero Trust and AI security markets, which are expected to disrupt a $100 billion security market [20][21] - The macro environment is anticipated to remain relatively unchanged, with a focus on ARR as the primary growth metric moving forward [28][92] Other Important Information - The acquisition of Red Canary is expected to contribute approximately $95 million to ARR and $90 million to revenue in fiscal year 2026 [27] - The company plans to optimize new products for margins over time as they scale [29] Q&A Session Summary Question: How is SASE replacing firewall appliances? - Management indicated that firewall appliances, particularly in branches, are being replaced by Zero Trust architecture, with significant demand for Zero Trust branch solutions [33][36] Question: How will Z Flex help exceed sales goals? - Z Flex provides flexibility in module adoption for customers, allowing for larger and better deals, and is being expanded to a broader customer base [39][42] Question: What does a Zero Trust Everywhere customer look like? - A Zero Trust Everywhere customer typically adopts multiple modules, with significant increases in ARR observed as they transition to this model [45][50] Question: What is the focus of AI security product adoption? - Customers are primarily focused on securing public AI applications first, followed by private models, with significant interest in agent-to-agent communication solutions [54][56] Question: What is the expected growth for data security solutions? - Data security solutions are being adopted alongside Zero Trust solutions, with a significant opportunity for upselling additional modules to existing customers [60][63] Question: What is the methodology behind fiscal year guidance? - The company maintains a prudent approach to guidance, shifting focus from billings to ARR as a more aligned growth metric [90][92]