Zscaler, Inc., an American cloud security company, in partnership with Bharti Airtel, India’s telecom provider, announced the launch of the AI & Cyber Threat Research Centre – India. The centre aims to advance India’s cyber resilience, protect critical sectors, and accelerate the adoption of trusted AI across the country’s digital ecosystem.“This multi-stakeholder initiative is dedicated to safeguarding sectors essential to India’s economic and national security, such as telecommunications, banking, and ene ...

Core Viewpoint - Zscaler Inc. is considered one of the top AI stocks to buy, with an upgrade to Outperform by Mizuho, highlighting valuation support despite concerns over near-term growth prospects [1] Group 1: Company Performance - Zscaler's shares have experienced weakness following a solid first fiscal quarter, attributed to slightly lower guidance for net new Annual Recurring Revenue (ARR) in the second fiscal quarter and the absence of a specific contribution from the recent Red Canary acquisition [1] - Despite significant top-line growth, Zscaler's gross margins are under pressure due to the rapid adoption of newer products with lower margins, necessitating higher operating expenses as the company aims to capture market share in high-growth areas like AI safety and expanding Zero Trust systems [2] Group 2: Market Position and Strategy - Mizuho emphasizes the need for more transparency from management regarding Zscaler's organic growth this year, but remains confident that the company is well-positioned within the Secure Access Service Edge (SASE) and Zero Trust markets [3] - Zscaler operates as a cloud-based security company, providing cybersecurity solutions that protect user access to applications and data regardless of location, replacing traditional hardware-based security with its cloud-native Zero Trust Exchange platform [4]

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]

Core Insights - Zscaler, Inc. reported strong financial results for Q1 FY2026, highlighting robust demand for its Zero Trust and AI Security platform, with Annual Recurring Revenue (ARR) exceeding $3.2 billion, growing over 25% year-over-year [3][6][8] - The company emphasizes the integration of recently acquired technologies to enhance its AI Security offerings, addressing emerging security challenges [3][6] Financial Performance - Revenue increased by 26% year-over-year to $788.1 million [6][7] - ARR grew by 26% year-over-year to $3.204 billion [6][7] - Deferred revenue rose by 32% year-over-year to $2.351 billion [6][7] - GAAP net loss was $11.6 million, an improvement from a loss of $12.1 million in the previous year [6][7] - Non-GAAP net income reached $159.5 million, compared to $124.3 million in the same quarter last year [6][7] Operational Highlights - Cash provided by operations was $448.3 million, representing 57% of revenue, up from 53% in the previous year [7][32] - Free cash flow was $413.3 million, or 52% of revenue, compared to 46% in the prior year [7][32] - The company completed acquisitions of Red Canary and SPLXAI for a total of $692 million, aimed at enhancing its AI security capabilities [6][7][14] Market Position and Strategy - Zscaler's Zero Trust Exchange platform is positioned as a leading solution in cloud security, with a focus on protecting enterprises from cyber threats [3][23] - The company launched new innovations in its Zscaler Digital Experience (ZDX) to improve visibility and performance for IT teams [6][7] - Zscaler has surpassed $1 billion in software sales through the AWS Marketplace, indicating strong market traction [14] Future Outlook - For Q2 FY2026, Zscaler expects revenue between $797 million and $799 million, with non-GAAP income from operations projected at $172 million to $174 million [15][10] - The full-year revenue guidance is set between $3.282 billion and $3.301 billion, with non-GAAP net income per share anticipated to be approximately $3.78 to $3.82 [15][10]

Core Viewpoint - Zscaler's recent earnings report shows strong performance with significant revenue and earnings growth, indicating a positive trend leading up to the next earnings release [2][3][9]. Financial Performance - Zscaler reported Q4 fiscal 2025 non-GAAP earnings of 89 cents per share, exceeding estimates by 11.3% and reflecting a year-over-year increase of 23.6% [2]. - Revenues for Q4 reached $719.2 million, surpassing estimates by 1.9% and management's guidance, with a year-over-year growth of 21% [3]. - Calculated billings increased by 32% year over year to $1.2 billion, with the Americas contributing 55% of revenues [4]. Customer Metrics - As of July 31, Zscaler had 664 customers with annualized recurring revenues (ARR) of $1 million or more, and 3,494 customers with ARR exceeding $100,000 [5]. Operating Details - Non-GAAP gross profit rose 18.5% year over year to $570.1 million, while the gross margin contracted to 79.3% [6]. - Non-GAAP operating income increased to $158.9 million, with an operating margin of 22.1% [6]. Balance Sheet & Cash Flow - Zscaler's cash, cash equivalents, and short-term investments totaled $3.57 billion as of July 31, 2025, up from $3.01 billion in April 2025 [7]. - The company generated operating cash flow of $250.6 million and free cash flow of $171.9 million in Q4 [7]. Guidance - For fiscal 2026, Zscaler forecasts revenues between $3.265 billion and $3.284 billion, with non-GAAP earnings per share expected in the range of $3.64 to $3.68 [9]. Industry Context - Zscaler is part of the Zacks Security industry, which has seen positive performance from peers like CrowdStrike, which reported a 21% year-over-year revenue increase [13].

Core Viewpoint - Zscaler Inc. is highlighted as a strong long-term investment opportunity, with analysts at Truist Securities maintaining a 'Buy' rating and a price target of $350, driven by growth in its emerging business segment [1][2]. Group 1: Business Strategy and Growth - The management team emphasized the company's long-term platform strategy, focusing on the Zero Trust Branch Offering [2]. - The Z-Flex licensing model, introduced recently, has become a significant growth driver due to its commitment-based subscription model, contrasting with traditional consumption or enterprise models [2]. - In Q4 of fiscal 2025, the Z-Flex program achieved over $100 million in total contract value bookings, marking a 50% increase quarter-over-quarter [3]. Group 2: Financial Performance - Zscaler reported revenue of $719 million for the quarter, surpassing consensus estimates of $706.95 million, largely attributed to the growth from the Z-Flex program [3]. Group 3: Company Overview - Zscaler Inc. is a cloud-based cybersecurity firm that offers a Zero Trust Exchange platform, which replaces traditional network security with cloud-delivered services, enabling secure internet access and application connectivity for distributed workforces [4].

Core Viewpoint - Zscaler Inc. is highlighted as a top investment opportunity in the cybersecurity sector, with a recent price target increase from Canaccord Genuity reflecting strong market performance and growth potential [1][2]. Company Overview - Zscaler Inc. is a cloud-based cybersecurity firm that provides secure internet and application access through its Zero Trust Exchange platform, offering services such as cloud firewalls, data loss prevention, and zero-trust network access (ZTNA) [4]. Market Opportunity - The company is positioned to capitalize on a serviceable addressable market exceeding $100 billion, driven by increased spending per customer and favorable industry trends [3]. Industry Trends - Zscaler's growth is supported by several industry tailwinds, including cloud migration, security modernization, and the accelerated adoption of Zero Trust principles [3]. Recent Performance - The stock has experienced a significant rally, increasing by 72% year to date, prompting Canaccord Genuity to raise its price target to $340 from $320 [1][2].

Core Insights - CrowdStrike Holdings (CRWD) reported a strong start to fiscal 2026 with a free cash flow (FCF) margin increase to 25% from 23% in the previous quarter, generating $279 million in free cash flow despite incurring $61 million in outage-related expenses [1][10] Financial Performance - The company's revenue grew 20% year over year to $1.1 billion in the fiscal first quarter, driven by the adoption of the Falcon Flex platform, with over 820 customer accounts utilizing this model [2] - CrowdStrike achieved a deal value milestone of $3.2 billion within two years of launching Falcon Flex, reflecting a 31% sequential growth and over six times year-over-year growth [2][10] Strategic Initiatives - A strategic realignment in May 2025 focused on reallocating investments into growth areas such as cloud, identity, exposure management, AI, and Next-Gen Security Information and Event Management, which is expected to enhance platform resilience and add at least 1% to its non-GAAP operating margin target in fiscal 2027 [3] - The company aims to exceed 30% in free cash flow margins by fiscal 2027 if the current pace of platform gains and Flex adoption continues [4] Competitive Landscape - Competitors like Zscaler (ZS) and SentinelOne (S) are also evolving their platforms to meet enterprise security demands, with Zscaler reporting an annual recurring revenue (ARR) of $2.9 billion, up 23% year over year [5][6] - SentinelOne experienced a 24% year-over-year growth in ARR in the first quarter of fiscal 2026, driven by the adoption of its AI-first Singularity platform [7] Valuation Metrics - CrowdStrike's shares have increased by 47.5% year to date, outperforming the security industry's growth of 25.6% [8] - The company trades at a forward price-to-sales ratio of 24.14X, significantly higher than the industry's average of 15.06X [11] - The Zacks Consensus Estimate for CRWD's fiscal 2026 earnings indicates a year-over-year decline of 10.94%, while fiscal 2027 earnings are projected to grow by 34.68% [14]

Core Insights - Palo Alto Networks (PANW) is successfully implementing its platformization strategy, leading to significant customer adoption across its product offerings in network, cloud, and security operations [1][4] - The company added over 90 new platformized deals in Q3 of fiscal 2025, totaling approximately 1,250 platformizations among its top 5,000 accounts [1][10] - Large transactions indicate a willingness among customers to invest in unified platforms, with notable deals including a $90 million contract with a global consulting firm and a $46 million deal with a financial services firm [2][3] Customer Adoption and Growth Potential - Customers utilizing multiple PANW platforms increased by nearly 70% year over year in Q3 [4] - Management aims for platformization to contribute significantly to its $15 billion Next-Gen Security Annual Recurring Revenue (ARR) target by fiscal 2030, with 60-70% expected from platformized customers [4] - Currently, only about 2% of PANW's over 70,000 customers are fully platformized, indicating substantial growth potential [4][10] Competitive Landscape - Competitors like Zscaler and SentinelOne are also enhancing their platforms to meet enterprise security needs [5] - Zscaler reported an ARR of $2.9 billion, growing 23% year over year, with its Zero Trust Exchange platform becoming a key growth driver [6] - SentinelOne achieved a 24% year-over-year growth in ARR, driven by the adoption of its AI-first Singularity platform [7] Financial Performance and Valuation - PANW shares have increased by 12.5% year to date, compared to the security industry's growth of 23.5% [8] - The company trades at a forward price-to-sales ratio of 12.92X, which is lower than the industry's average of 14.85X [12] - The Zacks Consensus Estimate for PANW's fiscal 2025 and 2026 earnings suggests year-over-year growth of 15.1% and 11.2%, respectively, with recent upward revisions in estimates [15]

Core Viewpoint - Market volatility driven by macro uncertainty necessitates a focus on stocks with strong long-term return potential, supported by top Wall Street analysts' recommendations [1][2] Group 1: Nvidia (NVDA) - Nvidia reported market-beating results for Q1 of fiscal 2026, maintaining confidence in AI infrastructure demand despite chip export restrictions [3][4] - JPMorgan analyst Harlan Sur reiterated a buy rating with a price target of $170, noting solid revenue despite a $4.5 billion write-down related to H20 inventory [4][6] - Excluding H20 shipments, data center revenue is projected to grow 16% quarter over quarter, driven by strong customer spending on AI projects [5][6] - Demand for Nvidia's Blackwell platform is strong, expected to exceed supply for several quarters, supported by mega data center deals [6][7] Group 2: Zscaler (ZS) - Zscaler's fiscal Q3 results surpassed expectations, driven by demand for its Zero Trust Exchange platform and AI security needs [8][9] - JPMorgan analyst Brian Essex reaffirmed a buy rating and raised the price target to $292, highlighting the company's raised full-year outlook for revenue and profitability [9][11] - The number of customers with over $1 million in annual recurring revenue increased by 23% year over year, positioning Zscaler to exceed $3 billion in ARR [11][12] - The acquisition of Red Canary is viewed positively, expected to enhance Zscaler's IP and threat intelligence capabilities [12] Group 3: Salesforce (CRM) - Salesforce reported better-than-expected revenue and earnings for Q1 of fiscal 2026 and raised its full-year forecast, alongside an $8 billion acquisition of Informatica [13][14] - TD Cowen analyst Derrick Wood reiterated a buy rating with a price target of $375, noting strong demand signals from the company's renewed focus on sales capacity growth [14][16] - AI adoption is accelerating, with Data Cloud and AI ARR rising over 120% year over year, indicating strong traction for the Agentforce offering [15][16] - Salesforce is increasing its workforce aggressively, signaling positive demand and growing sales pipelines [16][17]